Scandinavian airline SAS posted its first full-year profit in five years, sending its shares higher today despite a weaker-than-expected end to 2005.
Competition from no-frills airlines, rising jet fuel costs and overcapacity have hurt airlines in recent years.
SAS's swingeing cost cuts and capacity reductions as well as a pick-up in global airline traffic helped it back into the black in 2005, and its 2006 performance is likely to benefit from similar trends.
"SAS has said for three or four years it would deliver a profit and now it did," said Handelsbanken analyst Ann Bowers. "This is a positive and should definitely be reflected in the equity market today."
Full-year pretax profit was 418 million crowns ($75.7 million), which compared with a forecast of 469 million crowns and with a loss of 1.83 billion in 2004.
Shares in SAS were up 5.5 per cent in Stockholm at 106.50 crowns at 10:40am.
The flag carrier, half-owned by the governments of Sweden, Denmark and Norway, said it had completed a cost-cutting plan and would cut 2 billion crowns more in 2006.
SAS said it saw passenger growth of 2 to 3 percent during 2006 in Scandinavia and 4 to 5 percent to and from Europe. The first quarter has not started well, though. SAS was hit by a three-day wildcat strike by Danish pilots and absenteeism from colleagues in Norway in January, which forced it to cancel hundreds of flights.
It said this hit traffic by 4 to 5 percent for the month. "It is doubtful the Danish division can end in the black (in 2006)," said Pedersen at Sydbank.