* Sees overcapacity in several markets
* Unit revenue expected to fall in rest of year
* Competition at home to push down yields
* FY pretax to be cut by 1 bln crowns
* Shares down 4.4 pct, hit eight-month low (Adds company comment, detail, background.)
STOCKHOLM, May 8 (Reuters) - Airline SAS trimmed its full-year profit forecast on Thursday, estimating competition in its home Scandinavian markets would push down yields and cut around 1 billion Swedish crowns ($154 million) from pretax earnings in the current year.
Its shares were down 4.4 percent at 12.95 crowns at 0719 GMT against a small rise in the wider Stockholm index. The stock fell as low as 12.70 crowns, its lowest in about eight months.
SAS, 50 percent owned by Sweden, Denmark and Norway, has been struggling for years with overcapacity and competition from budget carriers such as Ryanair and Norwegian Air .
The airline said rivals had shifted capacity to Scandinavia in the last six months, meaning unit revenue had developed more weakly than expected during the second quarter.
"Market conditions remain challenging with overcapacity in several of SAS's markets, for which reason the yield and PASK (or revenue per passenger per available seat kilometer) are expected to continue to decline in 2013/2014," the airline said in a statement.
However SAS said that if conditions don't worsen, it now sees the potential to make a pretax profit in its current fiscal year through October, "including the positive effect from the amendments to pension reporting".
Positive earnings effects from pension changes are expected to be around 1 billion Swedish crowns and were previously excluded from the airline's outlook.
After heavy restructuring SAS posted its first annual pretax profit since 2007 in the fiscal year 2012/13.
It reported a loss of 1.17 billion Swedish crowns for the fiscal first quarter, before taxes and non-recurring items, ($184 million). ($1 = 6.4942 Swedish Crowns) (Editing by Mia Shanley and David Holmes)