High fuel bills continue to take their toll as SAS Group announced it will implement drastic action to cut costs after reporting first quarter losses of SEK1.2bn ($187m). 

It will cut staff by 1,000 and reduce the fleet by 11 aircraft (5% of capacity) starting this autumn, while the planned addition of another long-haul aircraft has been postponed.

“SAS Group’s earnings for the first quarter were very weak,” said SAS president and CEO Mats Jansson, adding that Easter falling early this year (March) exacerbated what is usually a slow season anyway.

“We are undertaking a number of short-term measures [which] will generate [savings] of SEK1.1bn, including price adjustments, changes to the traffic programmes, additional efficiency enhancements of overheads and the discontinuation and postponement of certain activities. 

“In total, the number of positions will be reduced by approximately 1,000.”

And all this despite carrying 2.4% more passengers than the same period in 2007.

“There are indications that global travel trends are so serious that we must prepare for a more enduring economic downturn,” continued Jansson.

“There is also certain overcapacity in the market and tendencies towards a decline in business travel.”

An SAS spokeswoman said there was no detail on what routes would be affected by the capacity cuts, and that the airline is currently consulting with unions on its programme for reduction which it has called ‘Profit 2008.’ 

Jansson was also at pains to stress SAS will continue its implementation of the ‘Strategy 2011’ programme to improve customer satisfaction and affect a ‘cultural turnaround’ in the company. It is aiming to maintain the quality of its service and “continuously improve [its] products,” he said.