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SAS expects profits in 2013 after cost cuts

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SAS expects profits in 2013 after cost cuts
17:18 CET+01:00
Scandinavian airline SAS said on Wednesday it will be profitable next year, thanks to an aggressive cost-cutting drive which prompted objections that it had strong-armed unions in the Scandinavian countries.

Assuming "that no significant unexpected negative events occur in our operating environment and that jet fuel prices remain stable at current levels, the SAS group's assessment is that potential exists" for a pre-tax profit in the coming year, chief executive Rickard Gustafson said in a statement.

He added that the current quarter will be "extremely weak" since it's traditionally a less profitable time of the year for the airline industry.

SAS last month struck deals with all of its unions to cut salaries and pensions and raise working hours in a bid to turn the company's dire financial situation around.

Critics have said the company's demands, dubbed its "final call" savings plan, ran counter to the Scandinavian labour model, which relies heavily on collective bargaining and a close dialogue between unions and employers.

"Our unions have shown that they have shouldered responsibility and delivered under extraordinary circumstances. The new agreements create the necessary conditions for increased flexibility, reduced complexity and lower costs," Gustafson said.

SAS has come under increasing pressure in recent years from low-cost rivals such as Oslo-based Norwegian, Europe's third-largest budget airline.

The group said on Wednesday that its high level of customer service and a global network of destinations would differentiate it from budget rivals.

The company, which had already announced its third quarter results, said it made a pretax loss of 1.25 billion kronor ($189 million) in the truncated financial year ending October.

The group's new fiscal year began in November, meaning that the current three-month period is its first quarter.

AFP/The Local/og

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