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SAS narrows loss in Q2, hurt by ash cloud

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SAS narrows loss in Q2, hurt by ash cloud
SAS Airbus 340
11:47 CEST+02:00
Beleaguered airline SAS announced it narrowed its losses in the second quarter, but remained deep in the red due to the flight chaos caused by a cloud of volcanic ash from Iceland in April and May.

"Adjusted for ash-cloud effects, SAS generated a profit for the second quarter of 2010," departing President and CEO Mats Jansson said in a statement.

Between April and June, SAS, in which Norway, Denmark and Sweden together hold half the stock, said it suffered a net loss of 502 million kronor ($68.5 million) compared with a loss of 1.05 billion kronor a year earlier.

Excluding exceptional items and the volcanic ash cloud disruptions, which alone cost SAS around 700 million kronor, the airline registered a profit of 464 million kronor during the quarter.

Although sales were better than during the first quarter, they remained 19 percent lower than during the April-June period a year ago at 9.98 billion kronor from 12.22 billion kronor.

The market responded favourably to Wednesday's report, with SAS shares

trading 3.07 percent higher at 26.90 kronor on the Stockholm stock exchange,

which was up 0.16 percent.

SAS, which has been hard-hit by the rise of low-cost airline Norwegian and by plunging passenger traffic numbers in the wake of the global economic crisis, saw its second quarter passenger numbers slip 8.3 percent year-on-year

to 6.3 million.

The Scandinavian airline launched a major restructuring plan, Core SAS, last year aimed at saving nearly 8 billion kronor, entailing more than 5,000 layoffs.

The company added that the IATA industry body anticipates continued losses totaling $2.8 billion (20.57 billion kronor) for European airlines in 2010.

The company, which claims it has 3 million members in its loyalty program, also announced its largest-ever low-fare campaign on Wednesday, offering 1 million low-price tickets.

The company announced last week that Jansson, who spearheaded the restructuring plan, would leave the company in the fall and that it had yet to find a suitable replacement for him.

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