Spanair crash least of SAS woes: CAPA

SAS has had its company credit outlook lowered from “Stable” to “Negative” by S&P, and it’s not just its subsidiary Spanair’s tragic Madrid crash which has caused the company to plummet, says analysts.

S&P cited unfavourable global economic conditions as well as the “economic repercussions” surrounding the fall-out around the Spanair crash as reasons for the downgrade.

An economic trading environment which continues to destabilise, lower numbers in premium traffic, and still high fuel prices balanced with continually high costs and a delay in cost-saving measures haven’t helped.

“Meanwhile, one of its largest competitors in the Scandinavian market, Sterling Airlines, is pruning costs and refinancing to make itself a tougher fighting outfit,” said the Centre for Asia Pacific Aviation (CAPA).

Sterling is now part of the Northern Travel Holdings (NTH) group, which also features Maersk Air in its portfolio.

“So, while SAS struggles with its political and industrial constraints, NTH is girding its loins for battle,” CAPA continues. “Shaping up against SAS a step further, Sterling Airlines and Norwegian Air Shuttle have just entered a codeshare agreement covering the Oslo-Copenhagen and Stockholm-Copenhagen routes.”

“And, from the end of Oct-08, the agreement will be extended to a number of international routes from Oslo and Stockholm. Sterling is directly targeting many of SAS’ European markets.”

With increased competition against a leaner and meaner Sterling, SAS’s battle for market share in Scandinavia and its surrounds has just begun.