Scandinavian airline SAS posted a surprise pretax profit in the third quarter and said it expected to unveil the results of talks with unions on cost savings that are key to its survival later Thursday.
Cost cuts and lower jet fuel prices helped the carrier to a positive result of SEK114 million kronor (USD$16 million) in the period.
Airlines around the world have suffered during the economic downturn as individuals and companies cut travel and opt for cheaper seats.
Lufthansa provided a gloomy outlook for the airline industry late last month, saying any green shoots of recovery were being swamped by pricing pressures in both passenger and cargo services.
Industry body IATA has said it sees the world's airlines losing USD$11 billion this year.
SAS, half-owned by the governments of Sweden, Norway and Denmark, was already struggling before the financial crisis with an old fleet and higher costs than rivals and has spent years trying to restructure.
A major stumbling block to becoming competitive has been high staff costs and a major part of SAS's latest turnaround plan is getting unions to agree to reduce these.
SAS will announce the results of talks with pilot and cabin crew unions on lower pay and new conditions later Thursday.
"Unless they strike a deal... they (SAS) are not going to get a sustainable platform," ABG Sundal Collier analyst Lars Heindorff said.
SAS said it had been negotiating during the evening and night.
"SAS is now working to analyze and compile the results of the negotiations," it said.
COST CUTS
SAS cut capacity sharply in the third quarter as passenger numbers continued to decline. Yield was down 7.6 percent due to falling business travel and competition.
Unit costs, however, fell faster -- 9.2 percent -- thanks to the latest turn-around plan and lower jet fuel prices.
"Generally it's a lower fuel bill and cost cutting," Heindorff said of the better-than-expected result.
The airline said that its Core SAS program, aimed at cutting SEK4.5 billion from costs, was on track. This has boosted earnings by SEK1.3 billion so far in 2009.
Fuel costs were down by SEK1 billion compared with the third quarter of 2008.
No-frills airline Ryanair -- a major competitor to SAS -- saw its first-half net profit jump 80 percent, partly as a result of lower fuel costs.
