Scandinavian airline SAS posted a smaller than expected second-quarter pretax loss and said it would extend a program to boost revenues and cut costs.The airline, half-owned by Sweden, Norway and Denmark, made a pretax loss of 106 million crowns ($17 million) in the second quarter against a mean forecast of a loss of 700 million in a Reuters survey of analysts and a profit of 762 million in the same period a year earlier.
The figure was inside the spread of forecasts in the survey which ranged from a profit of 156 million crowns to a loss of 1.4 billion crowns.
“The reasons for the decrease in earnings are well known: rapidly rising jet-fuel prices to record-high levels combined with weaker economic trends and overcapacity in the market,” Chief Executive Mats Jansson said in a statement.
“There is no doubt that the situation in the air-travel industry is serious and probably the most difficult it has ever been.”
SAS said it would extend its Profit 2008 plan with an additional 400 million crowns of measures, aiming to give a total earnings boost of 1.5 billion crowns this year.
It said it planned to cut an additional 7 aircraft as part of the Profit 2008 plan, bringing the total to 18 planes.
SAS's Spanair unit, which it failed to sell earlier this year, will also cut 15 planes.
Like many other airlines, SAS has struggled to compete in recent years with cut-price rivals and overcapacity. The recent rise in oil prices have added to the burden. SAS's aged fleet of aircraft burn more fuel than competitors'.
SAS said fuel costs increased by 1.4 billion crowns compared with the second quarter of 2007.
Second quarter revenues were 17.7 billion crowns against a forecast of 17.5 billion in the poll. (Reuters)