Bloomberg News

SAS Group Management Rejects Offers From Cabin Crew, Pilots

November 18, 2012

SAS Braces for Possible Shutdown of Airline as Labor Talks Drag

SAS Group prepared for a possible shutdown of the Nordic region’s biggest carrier as talks with labor unions needed to secure financing dragged on. Photographer: Erik Abel/Bloomberg

SAS (SAS) Group, the biggest Nordic airline, said management rejected offers from unions representing cabin crew and pilots during talks aimed at finding a way to save the carrier.

Airline management has ordered all aircraft outside Scandinavia to be refuelled and ready to return to base immediately, and crews on all outbound flights told to carry enough cash to meet expenses, SAS spokesman Mikkel Thrane said.

A board meeting was due to be held today to discuss the talks and decide on future action, he said.

SAS, unprofitable on an annual basis since 2007, plans to cut office jobs and sell assets, including a ground-handling unit and Norwegian brand Wideroe.

The cutbacks are intended to reduce the payroll by more than 7,000 workers, SAS said Nov. 12. The company, part-owned by the governments of Sweden, Norway and Denmark, employed an average of 14,969 people in the third quarter, a 2.6 percent decline from a year earlier.

Disposals by SAS, whose main brand is Scandinavian Airlines, will also include airport real estate and unused aircraft engines to raise a total of 3 billion kronor ($440 million), the company said on Nov. 12. About 800 administrative posts will be eliminated by focusing work at SAS’s Stockholm base under the plan.

SAS has already scrapped 300 office jobs this year in an earlier project to cut 5 percent from spending and lift earnings by 5 billion kronor through 2013. Talks are under way with potential buyers for the handling business, which employs 5,000 people, and “all options” are being considered for Wideroe, based in Bodoe in northern Norway, where the workforce totals 1,400, Chief Executive Officer Rickard Gustafson said Nov. 12.

Banks reached an agreement on increasing SAS’s credit lines to 3.5 billion kronor from 3.1 billion kronor and extending them through March 2015, the company said on Nov. 12. The agreement is contingent on unions approving the latest cost reduction totaling 3 billion kronor. Credit providers “won’t support” SAS unless it demonstrates it can make a profit, Gustafson said at the time.

The cutbacks at SAS are part of an industrywide reorganization in Europe. International Consolidated Airlines (IAG) Group SA, the parent of London-based British Airways, announced plans on Nov. 9 to eliminate 4,500 posts at the Spanish carrier Iberia, or more than one-fifth of the workforce.

Air France-KLM Group (AF), Europe’s biggest airline, said Oct. 31 that it intends to cut 1,300 positions at its Dutch division in addition to 5,000 already being eliminated at the larger French business. Second-ranked Deutsche Lufthansa AG (LHA) is dropping 3,500 administrative jobs and as many as 1,000 catering positions.

To contact the reporters on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net; Peter Levring in Copenhagen at plevring1@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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