SAS Scandinavian Airlines has reported a SEK556 million ($61.7 million) 1Q net loss for the November to January period, more than doubling the SEK246 million loss it posted in the year-ago period.

“We are putting a seasonally weak quarter behind us, which, as expected, was worse than the preceding year. The inadequate profitability emphasizes the importance of SAS mobilizing to address the cost disadvantages that we have compared with more recently established competitors. Accordingly, we are working on the details of further measures to create long-term competitiveness and profitability,” SAS president and CEO Rickard Gustafson said.

Revenue for the quarter rose 8.2% to SEK9 billion while expenses increased 12.7% to SEK9.5 billion, producing an operating loss of SEK577 million, more than triple the SEK186 million operating loss in the prior-year quarter.

“Overall, we foresee a large number of activities ahead, aimed at reducing the cost gap between SAS and more recently established competitors. This, combined with the establishment of new bases in London and Spain, will prepare for a strong SAS that can leverage all of the ... growth opportunities that exist in our market,” Gustafson said.

During the three-month period, SAS shaved SEK145 million from its cost base, contributing to a 5.7% decline in its currency-adjusted unit cost, excluding jet fuel.

Traffic rose 18.9%, but unit revenue declined 5.6% and SAS’s currency-adjusted yield declined nearly 12% to a “historically low level.”

“Despite market uncertainty and a weak start to the fiscal year, SAS expects to be able to deliver a positive income before tax and nonrecurring items for the 2016/2017 fiscal year,” SAS said.

Victoria Moores