(AFP) – Feb 9, 2010
STOCKHOLM — Shares in SAS Scandinavian Airlines plunged on Tuesday after it said it was planning to raise new capital and cut 650 jobs as part of an expanded cost-reduction plan.
The airline also posted a worse-than-expected fourth quarter net loss, losing 1.3 billion kronor (176 million dollars, 128 million euros) instead of the 733 million expected by analysts surveyed by Dow Jones.
In 2008, the airline lost 2.79 billion kronor in the fourth quarter.
SAS shares closed down 28 percent to 2.54 kronor on a slightly positive Stockholm Stock Exchange.
"What we plan is 650 full-time (job cuts) within the SAS Group," Elisabeth Manzi, SAS director of media relations, told AFP.
SAS has already axed thousands of jobs as part of its cost-cutting drive.
The airline reported that overall traffic decreased by 5.1 percent during January, with passenger numbers down 4.4 percent.
SAS also announced a rights issue to raise around five billion kronor, which follows a six-billion-kronor issue last year.
The airline, in which Norway, Denmark and Sweden together hold half the stock, has been hit by the rise of low-cost airline Norwegian and the plunge in passenger traffic numbers as a result of the global economic crisis.
"The sharp downturn in the economy led to an extremely large decline in business travel, which had a significant impact on the entire aviation industry," SAS said in its earnings statement.
"Market conditions deteriorated far more extensively than originally expected when the Core SAS strategy was initiated a year ago," it added, referring to the savings plan announced last February.
The cost cuts were therefore being increased by two billion kronor to 7.3 billion kronor, with most of falling this year, SAS said.
Sweden, which holds 21.4 percent of SAS's stock, said Tuesday it would contribute 1.07 billion kronor to the airline's capital raise if it met certain conditions.
Norway, which controls 14.3 percent of SAS, said it would put around 575 million Norwegian kroner (70 million euros, 97.7 million dollars) on the table, also subject to conditions.
Low-cost competitor Norwegian reacted to the governments' announcements by saying that Swedish and Norwegian state support was "distorting competition."
Norwegian said that SAS was, "thanks to tax payers' support," responsible for "aggressive price dumping over the past year."
SAS's loss over the whole of 2009 was 2.95 billion kronor -- lower than the 6.36 billion kronor in 2008, while sales were down 15 percent to 44.92 billion kronor.
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