Analyst expects a splash from the abdomen for the return of air traffic – E24

Sydbank analyst Jacob Pedersen says omikron and the subsequent decline in Scandinavia’s willingness to travel will affect SAS.

– So there are many indications that our forecast of a SAS deficit of SEK 1.4 billion in 2021/22 is very optimistic, Pedersen wrote in a Christmas Eve comment.

SAS has skewed fiscal years that run from November 1 to October 31. SAS lost 6.5 billion Swedish kronor in 2020/21.

Ryanair expects double large losses

The Sydbank analyst’s comment comes after Ryanair said it believes the losses will be twice as large as the losses due to omikron.

In its previous estimate, the low-cost airline estimated it would lose between 100 and 200 million euros this year. This corresponds to between 1 and 2 billion NOK.

in it new accounts The loss was more than doubled. Ryanair now expects a shortfall of 250-450 million euros, which equates to 2.5-4.5 billion kroner.

Pedersen notes that Ryanair has been much more aggressive than SAS in recovering air traffic. This has lowered SAS earnings, but it could also mean a smaller setback now with lower demand.

But this does not mean that SAS is devoid of negative effects:

We expect SAS to be affected financially by a more modest desire to travel.

It will likely be visible in December’s traffic numbers, although Christmas traffic will pick up a bit, Pedersen believes.

The market value of SAS is approximate. It’s 80 percent higher than it was before the pandemic, Pedersen says, and we consider it completely disconnected from reality in terms of earnings.

Almost in free fall

Demand is now almost in free fall due to travel restrictions and omicron in Europe, says analyst Hans-Jürgen Elnas.

In Norway, domestic passenger volumes have fallen in recent weeks, and abroad has also fallen, though not sharply, Elnæs points out. He says it’s bad news for SAS, Norwegian and newcomer Flyr.

– SAS is the most exposed, since November the airline has operated about 500 daily flights with an ambitious winter program. Now, SAS will likely have no choice but to downsize in January, which is costly and has a negative impact on the bottom line.

What SAS, Norwegian and Flyr have in common, Elnæs says, is that they are completely dependent on the Norwegian domestic market.

– And when it weakens, it immediately has a negative effect on profits. This means lower-than-expected revenue in January and likely also in February and March, but it depends entirely on developments in the pandemic and travel restrictions.

Elnæs expects the first quarter of 2022 to be weaker than expected for airlines, and traffic likely won’t pick up again until Easter.

Thus, it is of paramount importance to airlines that the summer of 2022 will be one of the best summer ever, and if it does not happen, 2022 will be another ‘horrible year’ for many airlines.

This is what companies say

E24 asked SAS, Norwegian and Flyr how omikron affected it.

SAS Press Director John Eckhoff says winter is generally a weaker period for flying, but they are optimistic about summer.

“Among other things, in order to counteract periods of exponentially increased travel activity, we are creating new platforms to be more flexible and competitive in the future,” Eckoff wrote in an email.

Norwegian communications consultant Eileen Skari says the proliferation of omicron affects them like any other airline.

– But we basically have a conservative approach to the winter season, which is a bit heavy for flying anyway. We know from government restrictions that experience means a lot to people’s travel patterns, and we’ve seen that when restrictions are imposed or removed, Scarry says.

Anita Svanes, Head of Communications at Flyr, answers:

We are closely following the situation and adapting the track program according to demand, which is in line with our business model of being adaptable.