SAS Returns to Profit on Passenger Gain
SAS Group, the Nordic region’s largest airline, returned to profit in the second quarter after passenger traffic rose and the carrier cut costs.
Net income was 551 million kronor ($86.2 million) compared with a 502 million kronor loss a year earlier, the Stockholm- based company said today in a statement. Profit beat the average estimate of 202 million kronor in a Bloomberg survey of six analysts. The shares rose the most in more than two years.
“There are positive prospects for continued traffic growth during the second half of 2011, particularly on U.S. routes, but also on domestic and intra-Scandinavian routes,” Chief Executive Officer Rickard Gustafson said in the statement.
SAS, part-owned by the governments of Sweden, Norway and Denmark, had been unprofitable in all but two of the previous 14 quarters as it struggled with a drop in travel and competition from discount carriers such as Norwegian Air Shuttle ASA. SAS in May forecast a full-year 2011 pretax profit, and the carrier reaffirmed that prediction today.
SAS climbed as much as 3.75 kronor, or 31 percent, to 16 kronor, the most since March 16, 2009. The stock was up 18 percent at 14.45 kronor as of 11:25 a.m. in Stockholm trading, narrowing the decline for the year to 36 percent and valuing the carrier at 4.75 billion kronor.
SAS is not engaged in any merger or acquisition talks, Gustafson said today in an interview at the airline’s Stockholm headquarters.
“I’m here to build an operation that allows SAS to stand on its own legs,” Gustafson, who joined SAS as CEO on Feb. 1, said. Consolidation thoughts “occupy very little of my focus right now.”
Gustafson said he will present a new “strategic platform” for the carrier this autumn, declining to be more specific. While SAS will continue to trim costs, the platform is unlikely to include a new “big cost-savings package,” he said.
The quarterly result was the best since the second quarter of 2008, SAS said. The company concluded a 7.8 billion kronor cost-savings plan during the quarter. Sales rose 13 percent to 11.2 billion kronor, as passenger numbers jumped 18 percent.
“The situation for the company is improving, in big part thanks to its cost savings,” Jacob Pedersen, an analyst at Sydbank A/S in Aabenraa, Denmark, with an “underweight” rating on the shares, said yesterday by phone. “The company is in a far better position today than it has been for some years, though big challenges remain such as price pressure from Norwegian and other low-cost carriers.”
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