The International Air Transport Association (IATA) has already warned of tough times ahead, predicting airline industry profits in 2012 will fall 29 percent to $4.9 billion from $6.9 billion this year.
SAS reported a third-quarter pretax profit below expectations and lowered its full year outlook slightly due to worsening economic climate.
“On condition that nothing unexpected occurs, it is our opinion that there is still the potential for SAS to achieve marginally positive income before tax for full-year 2011,” the airline said in a statement.
Previously, SAS had not said profit would be marginal at best in 2011, only that it believed it would make a profit.
SAS CEO Rickard Gustafson said jet-fuel costs, competition and global economic developments, particularly in Spain where SAS still owns a stake in Spanair, were behind the new caution.
Year-to-date, SAS’s pretax profit is 448 million crowns, compared with a loss of 2.6 billion a year earlier.
The airline, half-owned by Sweden, Denmark and Norway, has not made a full-year profit since 2007 and has only been in the black three times in the last 10 years.
Shares in SAS were down 7.17 percent at 11 crowns at 0916 GMT. The STOXX Europe 600 Travel and Leisure index was flat.
SAS made a pretax profit of 276 million crowns ($42 million) in the third quarter against a forecast of 369 million in a Reuters poll and a loss of 1.0 billion a year earlier.
The airline has been struggling for years with high costs and fierce competition from no-frills rivals such as Norwegian Air and Ryanair.
The global downturn in 2009 and soaring jet fuel prices in recent years have added to its troubles, though a series of restructuring packages has made the airline much more competitive in recent quarters.
SAS has refreshed its fleet, sold non-core operations and negotiated more efficient working practices with unions, bringing down costs.
The most recent program, Core SAS, led to savings of around 7.6 billion Swedish crowns ($1.2 billion) and cut unit costs by more than 20 percent. In September, SAS said it would cut unit costs by an additional 3 to 5 percent annually until 2015.
But if global recession strikes and passengers, particularly high-paying business class travelers, cut back on flights, next year could see SAS slip back into the red.
“We knew that the problems where coming around the corner, we’ve heard it from Finnair and we heard it from Lufthansa,” said Jacob Pedersen, analyst at Sydbank.
He said weak results, weak traffic figures for October and the cut in the profit outlook were good reasons for the negative share price reaction.
“Looking forward into the earnings environment in the next quarters it will be more difficult than I anticipated,” he said.
