* Aug traffic in RPK terms falls 17.1 percent from yr ago
* SAS says sees further yield pressure going forward
* Says market unpredictable, sees uncertainty over recovery
* SAS shares up 0.24%, underperforming European blue chips
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STOCKHOLM, Sept 7 (Reuters) - Scandinavian airline SAS said on Monday that August passenger traffic, measured as the number of passengers times the kilometres flown, slid 17.1 percent from a year ago.
The airline, half of which is owned by Sweden, Norway and Denmark, said its yield in July -- the most recent month for which data is available -- was down 3.2 percent, meaning it made less money for each passenger kilometre flown.
The change in yield in August would likely be "more negative", SAS said.
As the airline cut capacity, it managed to fly with fuller planes than a year earlier, raising its passenger load factor 3.1 percentage points to 76.1 percent.
"The rising load factor is at the expense of the yield, which continues to decline due to too much overcapacity in the market and intense competition from low-cost carriers," said Lars Heindorff at ABG Sundal Collier.
"We do not believe that the situation with too much capacity in the market will be solved in the near future," he added.
"The yield pressure in combination with the weak demand adds further challenges to the industry and requires actions in order to mitigate the negative revenue impact," SAS said in a statement.
SAS, which announced plans in August to save an extra 2 billion Swedish crowns and to slash another 1,000 to 1,500 jobs, said it had started negotiations with unions on cost reductions.
Airlines have been hit hard by the global recession and high fuel prices. SAS, which has an ageing fleet and higher costs than many of its rivals, was already struggling before the financial crisis to compete with cheaper carriers and overcapacity.
"The market continues to be unpredictable and the uncertainty regarding the timing of the recovery is considerable," it said.
SAS shares in Stockholm were up 0.24 percent at 1028 GMT, underperforming the pan-European blue-chip index, which was up 1.3 percent. (Reporting by Oskar von Bahr and Mia Shanley, editing by Will Waterman)