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SAS profits beat expectations

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13:43 CET+01:00
Scandinavian Airlines System (SAS) on Wednesday beat market expectations with a 14 percent jump in net profit in the third quarter on the back of strong sales and continued cost cutting.

For the July to September period the carrier reported a 14.17 percent increase in net profit to 604 million kronor compared to 529 million for the same period last year, the company said in a statement.

Sales climbed to 18.035 billion kronor, up 8.86 percent on the year, and exceeded the 17.786 billion expected by analysts, according to a survey by forecasting and analysis service SME Direkt.

Pre-tax profit was 969 million kronor up 56.54 percent from the same period last year and above market forecasts of 940 million.

"The earnings trend is positive, but the strong economy is a significant contributory factor," SAS acting chief executive Gunnar Reitan said.

A cost savings program aimed at saving 2.5 billion kronor by the end of 2007 was being implemented and had been achieved to 68 percent, the company said.

"It is necessary to continue focusing full energy on cost cutting measures," Reitan added.

The number of passengers carried by SAS in the nine months to September was up 7.2 percent to 29 million on the previous year. In the third quarter passenger numbers had risen by 4.4 percent on the year to 10.1 million.

In early afternoon trade on the Stockholm stock exchange the airline's share price had dropped 2.09 percent on the day to 105.25 kronor.

Steven Brooker, aviation analyst at Enskilda Securities, said he saw Wednesday's share price fall as profit-taking after a recent strong run.

"I think this is short-term profit-taking in the share, with SAS's unit costs under control and sales surprising on the upside," Brooker told financial news agency AFX.

Reitan, the group's former deputy chairman, was named as SAS interim chairman in August after the resignation of Joergen Lindegaard.

In October the carrier announced that 54-year-old Swede Mats Jansson would take over as the group's CEO on January 1.

Jansson currently heads Swedish industrial and consumer giant Axel Johnson AB.

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