Airline SAS says made progress in survival plan

STOCKHOLM Thu Nov 8, 2012 11:20am GMT

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STOCKHOLM (Reuters) - Airline SAS has made progress in talks with banks and on cutting costs and selling assets, the company said on Thursday about efforts aimed at ensuring its survival.

While negotiations are being finalised, the company said it would delay reporting its full third quarter results, which had been due on Thursday. A new announcement, including the results, would come no later than November 12, it said.

"SAS has materially advanced these negotiations and the plan, and both are expected to be finalised within a few days," the Scandinavian airline said in a statement.

SAS has already published preliminary figures showing it made a pretax profit of 568 million crowns in the third quarter.

But SAS has not made a full-year profit since 2007 and has said its turn-around plan is expected yield approximately 3 billion crowns in earnings before tax. It also aims to sell assets totalling around 3 billion crowns.

A source told Reuters last week SAS is looking to sell its Ground Handling unit. Media have also reported the airline's frequent flyer scheme, Eurobonus, is up for sale.

Pilots at SAS's Norwegian unit Wideroe have said they would like to buy that airline if SAS is willing.

SAS announced at the end of last month it was in negotiations with creditors to extend financing and that it was planning sweeping changes to cut costs.

Other airlines are also in trouble, with Air France-KLM (AIRF.PA) and Deutsche Lufthansa (LHAG.DE) planning to shed jobs. British Airways and Iberia parent IAG (ICAG.L) are expected to set a new restructuring plan for Iberia.

But SAS also faces a hit from pension accounting changes, meaning a pension shortfall could effectively wipe out its shareholder equity when new rules come in November 2013.

Analysts believe the airline might have to raise more capital after share issues in both 2009 and 2010.

On Wednesday, sources told Reuters the Danish government was not discussing more cash for SAS.

(Reporting by Simon Johnson)