Struggling airline SAS, recently embarked on another round of cost cuts to end years of losses, reported better trading than expected in the first two months of the year, sending its shares up 14 percent in thin volume.
The Scandinavian carrier struck a rare upbeat note, offering a glimmer of hope to investors who have seen its shares languishing near a lifetime low hit only weeks ago, though it cautioned the first quarter would be seasonally weak.
"The first two months of the year have been trading above plans and SAS's cash position is substantially ahead of plan," the company said.
SAS, half-owned by the governments of Sweden, Norway and Denmark, has been fighting for years to cut its costs so it can compete with no-frills airlines such as Norwegian and Ryanair.
Its latest SEK5 billion kronor (USD$729.28 million) package of cost cuts and revenue measures - dubbed 4Excellence - was launched last year, the latest in a long line of turnaround efforts.
In 2011, SAS made a loss of SEK1.6 billion kronor after a loss the previous year of SEK3.1 billion. The last time it made a full year profit was in 2007.
But SAS has now replaced its old and expensive fleet, renegotiated contracts with staff and shed non-core businesses.
Analysts do not expect the economic downturn to be as bad this time as in 2008-2009.
In a note on Thursday, S&P said it expected RPK (revenue passenger km) could fall about 2 percent this year before a slight recovery in 2013.
"We do not see airlines' profitability falling to the extent that it did in the last recession," S&P said in a note.
SAS, which raised SEK5 billion kronor in a rights issue in early 2010, is also sitting on a pile of cash.
At the end of 2011 it had cash and cash equivalents of SEK3.8 billion kronor and unused credit facilities of SEK5 billion kronor.
The airline said on Thursday it had renegotiated loan covenants with banks to give it even greater financial flexibility. SAS said it did not believe it would have to use its expanded facility.