SAS CEO Rickard Gustafson apologized for the airline’s poor operational performance during the 2018 summer season, casting a shadow over a record fiscal third-quarter performance which saw the airline climb to a SEK1.55 billion ($169 million) net profit.

Announcing SAS’ fiscal year 2017/2018 third-quarter results Aug. 31, Gustafson described the May to July figures as “one of the strongest quarterly results in the company’s history,” which he said showed the airline’s strategy is working, even in the face of higher fuel costs and adverse exchange rates.

“The underlying earnings were more than SEK0.1 billion higher than last year, despite an increase of SEK0.5 billion in jet fuel costs as well as SEK0.1 billion in unforeseen costs in connection with operational challenges during the summer,” Gustafson said. “The positive trend in earnings is a result of successful seasonal adjustments in the network, improvements in the customer offering and further enhanced efficiency.”

However, Gustafson also used the forum to accept responsibility for “traffic disturbances,” which impacted 2% of the airline’s passengers over the summer. The disruption was caused by crew and staff shortages, technical issues, ATC delays and late aircraft deliveries from Airbus. He added that the crewing problems were partly caused by pilots leaving, without working their notice period.

“In a small-scale operation, these things have significant implications. We are sorting it out to make sure it does not happen again. I do admit we had issues. We are not trying to shy away from it, in any shape or form,” Gustafson said, speaking on the SAS results webcast.

SAS has rolled out short- and long-term measures to fix the situation. Gustafson said things had returned to normal since the beginning of August.

Revenue for the quarter was up 7.7% at SEK13.1 billion. Yields were up, while efficiency measures cut ex-fuel unit costs by 1.2%.

“Going forward we will be challenged by a weak SEK versus the USD, higher jet-fuel prices and intense competition. In order to counter these factors, SAS will continue to (i) improve the customer offering and increase seasonal adjustments, (ii) further enhance the operating model, and (iii) work toward a more environmentally-friendly and sustainable operation,” Gustafson said.

Despite these challenges, SAS has upgraded its full-year earnings before tax and nonrecurring items guidance to around SEK2 billion, up from the previous guidance of SEK1.5–2.0 billion.

Victoria Moores