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SAS airlines warn of new cuts

SAS airlines reported Tuesday that it will present a positive result for Q3 with an EBT of 568 MSEK, passenger revenue growth of 9% and unit cost reduction of 6%.

The airline states in a press release that in a very difficult and competitive industry environment, the positive development in Q3 is proof that implementation of the 4 Excellence strategy has proceeded according to plan-. As a result of the implementation of the 4 Excellence strategy SAS has been able to increase passenger revenues by 9% and lower its unit cost (CASK – fuel and currency adjusted) by 6% percent in the third quarter of 2012.

Furthermore, SAS has for some time signaled the need for significant further efficiency improvements in order to secure its long term competitiveness.

The company says it is currently finalizing a comprehensive plan to fundamentally address its cost on a long-term basis, to increase cost flexibility, reduce complexity and also reduce for the effect of the potential equity write down in 2013 due to pension accounting changes. The financial benefit from this plan is expected to amount to approximately 3 bn SEK in EBT. The plan further encompasses disposals of non-core assets to reduce the company’s long term dependency on third party funding going forward. These disposals total approximately 3 bn SEK.

Among other things, staff salaries have been reduced by an average 15-25 per cent NRK reports.