SAS posts $260 million loss in third quarter

STOCKHOLM, Sweden - Scandinavian airline group SAS AB said Wednesday it swung to a loss of 2.01 billion kronor ($260 million) in the third quarter, citing falling demand for air travel due to a weakening economy and high oil prices.

The loss compared to a profit of 701 million kronor in the same period in 2007.

Sales grew slightly to 16.4 billion kronor ($2.13 billion), from 16.3 billion kronor a year ago.

SAS shares dropped more than 5 percent to close at 40.30 kronor ($5.23) on the Stockholm exchange after the report.

The results were burdened by writedowns of 1.96 billion kronor ($245 million) in goodwill and tax assets in SAS subsidiary Spanair, which has been struggling financially and was hit by a deadly crash in Madrid in August.

SAS, which has previously announced a cost-cutting package designed to save 1.5 billion kronor ($195 million) this year, suggested it was looking for additional ways to reduce costs.

"The crisis in the air travel industry strikes indiscriminately," chief executive Mats Jansson said in a statement, noting that 30 airlines had filed for bankruptcy in 2008.

"Regardless of the choice of structural alternatives and solutions, it is of the utmost importance that we rapidly close the remaining cost gap we have in relation to comparable competitors," he said.

SAS last month said it was in talks concerning the group's future structure but declined to comment on speculation that Lufthansa was considering a takeover.

Jansson also lamented the Aug. 20 crash of a Spanair plane in Madrid that killed 154 of 172 people aboard. "To the best of our ability, we have endeavored to support and assist the family members of the victims in their time of deep sadness," he said.

The accident dealt another blow to the struggling Spanish subsidiary, which has seen earnings decline amid high fuel costs and intense competition and a weakening economy in Spain. Spanair's bookings are now back to pre-accident levels, but at a reduced yield, SAS said.

Stockholm-based SAS, which is 50 percent owned by the governments of Sweden, Denmark and Norway, has been hit in recent years by weak profitability, accidents, competition from budget airlines and strikes by pilots and cabin crew.

The group's main carrier is Scandinavian Airlines and it also owns regional airlines Spanair, airBaltic, Wideroe and Blue1. SAS said the number of passengers dropped 5.4 percent for the group as a whole, compared to the third quarter of last year.

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SAS: http://www.sasgroup.net

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