Sweden's SAS records Q2 profit, capacity up

AP News
Posted: Aug 17, 2011 3:50 AM
Sweden's SAS records Q2 profit, capacity up

Scandinavian airline group SAS AB posted its best earnings since 2008 during the second quarter of the year on the back of more passengers and lower costs.

The forecast-busting second-quarter results helped the company's stock to soar more than 27 percent to 15.60 kronor ($2.43) on the Stockholm stock exchange.

SAS also pleased the market by reiterating its outlook for 2011, saying it expects to record a profit for the full year.

The Stockholm-headquartered company reported a second-quarter net profit of 551 million kronor ($86 million), a marked reversal of last year's equivalent 502 million kronor loss, when operations were badly hit by the volcanic eruption in Iceland which cost the airline hundreds of millions of kronor.

Revenues in the three-month period were also up to 11.23 billion kronor from around 10 billion kronor last year.

Although costs fell in the April to June period, SAS said adverse effects stemming from the earthquake in Japan and the implementation of the group's restructuring program weighed somewhat on the results.

The airliner said its cost-cutting program, dubbed Core SAS, is near completion. So far, it has reduced unit costs by 23 percent since 2008. Costs related to the measures are still expected to cost another 100-200 million kronor in 2011, it said.

SAS CEO Rickard Gustafson called it the "best result since 2008" and was positive about the prospect of continued traffic growth in the second half of the year, particularly on U.S. routes.

But, he said, the positive result is still only "a step on the way" and that SAS will continue to keep a sharp eye on the development of both sales and costs.

In the second half of the year, Gustafson said SAS is due to launch a new strategic approach that will succeed Core SAS. The program will focus on profit growth, more cooperation and clearer customer focus.