SAS narrows loss in Q2, hurt by ash cloud

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.

SAS narrows loss in Q2, hurt by ash cloud
SAS Airbus 340

“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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‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.