Scandinavian carrier SAS has withdrawn its full-year financial guidance as a result of uncertainty around the impact on air travel demand of the coronavirus outbreak.
Amid a recent spike in coronavirus cases reported in Europe, the Star Alliance carrier has disclosed plans to reduce part of its short-haul capacity over the next two months to counter lower demand. The carrier had already suspended flights to mainland China in response to the outbreak and will now suspend Hong Kong services from 5 March.
”In order to mitigate the revenue impact from the reduced demand, SAS is pursuing a number of cost reduction initiatives,” the airline says a stock market update today.
Alongside cost-savings from the reduced capacity, it is also implementing other measures such as cuts in administration, a hiring freeze and the postponement of non-critical projects. ”Measures related to personnel expenses may include temporary lay-offs, voluntary leave, early retirement or other initiatives,” it says.
In its initial initial guidance for its financial year ending October 2020, SAS said it expected to deliver an EBIT margin before items affecting comparability of 3-5%. While it retained this guidance as recently as when releasing its first quarter results on 26 February, that was subject to a limited impact from coronavirus .
”Given the uncertainty surrounding the outbreak and its impact on overall demand for air travel, SAS withdraws its fiscal year 2020 guidance provided to the market on 5 December 2019,” SAS says today.
”At this stage, it is too early to assess the full impact on SAS operations and financial outcome and therefore not possible to give a more accurate guidance.”