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SAS Narrows First-Half Loss and Sees Progress on Restructuring

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June 12 (Bloomberg) -- SAS Group, the Nordic region’s largest airline, narrowed its first-half loss and said restructuring efforts including job cuts, new pay agreements and asset disposals are showing “tangible effects.”

The net loss for the six months through April was 1.02 billion kronor ($160 million), compared with a year-earlier loss of 2.97 billion kronor, Stockholm-based SAS said. Sales for the period were little changed at 19.5 billion kronor.

“The earnings level is not yet satisfactory,” Chief Executive Officer Rickard Gustafson said in a statement. “Our focus is directed to fully completing the restructuring measures and the forecast of achieving positive income for the full-year remains firmly in place.”

SAS is targeting earnings before interest and tax equal to more than 3 percent of sales, assuming a stable fuel price and no external shocks. The carrier cut about 300 job in the second quarter and aims to reduce headcount by about 1,000 positions by the end of the financial year.

Other restructuring measures include the sale of 80 percent of Wideroe Flyveselskap AS unit for 2 billion kroner and the outsourcing of ground handling to Swissport International Ltd. earlier this year.

The company’s 4Excellence savings plan, introduced in November, aims to deliver 3 billion kronor in savings over the next two years. The move to slash expenses comes as low-cost carriers including Norwegian Air Shuttle ASA on short-haul routes and network operators such as Air France-KLM Group and Deutsche Lufthansa AG reduce their own cost bases.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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