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UPDATE 1-Airline SAS says on track for full-year profit
September 4, 2013 / 7:22 AM / in 4 years

UPDATE 1-Airline SAS says on track for full-year profit

* May-July profit before tax, one-offs 973 mln SEK

* Shares up 9 pct (Adds detail, background)

STOCKHOLM, Sept 4 (Reuters) - Troubled Scandinavian airline SAS said on Wednesday it was on track to make a profit for its full year after inking a pre-tax profit for the third quarter, sending its shares up.

SAS has been through a series of restructuring programmes in recent years, but has not made a full-year profit since 2007, hurt by overcapacity and competition from no-frills carriers like Ryanair and Norwegian.

Old planes, inflexible unions and soaring jet fuel costs have added to its problems.

For the May-July period, SAS posted a profit before tax and non-recurring items of 973 million Swedish crowns ($147 million) against a profit of 497 million a year ago. Including one-offs, pretax profit was 1.12 billion crowns, up from 726 million.

“It is gratifying that our robust and sweeping restructuring program is having the anticipated effect,” Chief Executive Rickard Gustafson said in a statement. “Our forecast of achieving positive earnings for the full-year remains firmly in place.”

Shares in SAS, which has restated its year-ago numbers to reflect the fact its financial year now runs November through October, were up 9 percent at 0712 GMT.

The airline was close to folding last year, but persuaded banks and owners to provide it with fresh funds in return for a plan to sell off operations and cut wages to bring down costs.

Much has already been done and unit costs are down sharply, but SAS has yet to sign a final deal to divest its ground services operations, with nearly 5,000 staff, after it signed a letter of intent in March with private equity-owned Swissport.

Gustafson on Wednesday would not repeat to Reuters a comment from June that he hopes turn the preliminary agreement into a concrete deal by year end.

SAS’s struggles contrast sharply with growing regional rival Norwegian Air Shuttle, which is expanding its long-haul routes and placed Europe’s biggest aircraft order last year when it ordered 222 planes from Boeing and Airbus.

SAS full-year forecast is for an operating profit margin above 3 percent and a profit before tax, provided that no significant unforeseen event occurs in our business environment.

$1 = 6.6171 Swedish crowns Reporting by Stockholm newsroom; Editing by Alistair Scrutton

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