SAS pushes through plan to shrink airline
Scandinavia’s biggest airline is planning $887 million U.S. in cuts as it seeks an extension of credit lines needed to keep flying.
SAS Group’s plans to eliminate jobs and shrink its business were accepted by pilot and cabin-crew unions as Scandinavia’s biggest airline fights to stay afloat.
SAS surged 29 percent after reaching accords with all eight labor groups, with one deal that covers 600 Swedish cabin crew, freezing pay through 2014 and lifting the retirement age to 65, according to their union.
Danish flight attendants were the last to sign up, hours after a midnight deadline for a deal expired.
Unprofitable on an annual basis since 2007, SAS is planning $887 million U.S. in cuts as it seeks an extension of credit lines needed to keep flying. The Stockholm-based company’s recovery plan will eliminate office jobs and sell assets, including a ground-handling unit and Norwegian brand Wideroe, to pare the payroll by more than 7,000.
The accords put in place will boost SAS’s competitiveness and could pave the way for external tie-ups, Chairman Fritz Schur said in a briefing Monday in Copenhagen, adding that “a merger would be good for the company.”
SAS Group, which has 1,085 daily flights and serves 128 destinations, is the latest European carrier to struggle for survival. (SAS’ Seattle-Copenhagen flights ended in 2009.) Hungary’s Malev Zrt. and Barcelona-based Spanair SA, which used to be owned by SAS, collapsed this year as Europe’s debt crisis and high oil prices weigh on airlines.
With ticket sales tumbling, suppliers might have started requesting payments upfront had the union deals not been sealed, said Kenneth Sivertsen, an analyst at Arctic Securities in Oslo. Contingency plans for a collapse in talks had seen planes beyond Scandinavia refueled and ready to return to base, while outbound crews were ordered to carry enough cash to meet expenses.
SAS, whose main brand is Scandinavian Airlines, would have faced an uncertain future had unions rejected the restructuring, a spokeswoman said.