SAS Gains as Profit Rises on Payroll Costs: Stockholm MoverRichard Weiss
SAS Group gained the most in seven months after the Nordic region’s largest airline exceeded its profitability target in the third quarter, helped by lower payroll costs and higher passenger revenue.
The shares rose as much as 11 percent to 14.90 kronor in Stockholm today, where the company is based. That’s the steepest intraday jump since Jan. 24. They traded at 14.40 kronor, up 7.5 percent, at 2:10 p.m., valuing the company at 4.74 billion kronor ($720 million).
Earnings before taxes rose 54 percent to 1.12 billion kronor in the three months through July, SAS said in a statement. Nordea Equity Research had estimated 1.05 billion kronor. Profitability as measured by earnings before interest and taxes, or Ebit, as a percentage of sales, widened to 11.6 percent, exceeding the company’s 8 percent target. SAS, which is cutting about 1,000 jobs at its headquarters, reduced payroll expenses by 7 percent as it also introduces new wage and pension plans.
“We have made substantial progress” in restructuring, Chief Executive Officer Rickard Gustafson said in the statement
Passenger revenue rose 5.3 percent in the quarter, adjusted for currency swings. The company is selling 2.7 billion kronor worth of assets, including its Norwegian unit Wideroe Flyveselskap AS, and aircraft engines.
The company reiterated a goal for the full-year Ebit margin to exceed 3 percent and a profit before taxes. SAS last earned a profit before taxes in 2007.
The Bloomberg EMEA Airlines Index fell 5.8 percent today, led by a drop in Ryanair Holdings Plc after the discount airline said full-year earnings may miss its target.