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Scandinavian airline SAS launches drastic cost-cutting program

Ailing Scandinavian airline SAS on Tuesday announced a major cost cutting plan, as the carrier faced further heavy losses.

SAS planes at Stockholm Arlanda airport
SAS planes at Stockholm Arlanda airport in March 2020. The airline on February 22nd 2022 announced a major costcutting plan. Photo: Jonathan NACKSTRAND / AFP

Under the new plan the company will reduce costs by 7.5 billion Swedish kronor ($800 million, 710 million euros) annually.

“Absent fundamental change,” the current situation in the airline sector, which is plagued by the economic fallout of the

pandemic, “will quickly exhaust SAS’ cash resources,” the carrier said in a statement.

The “full transformation” of the business will affect “its network, fleet, labour agreements and other cost structures”, the company.

Called “SAS Forward”, it will notably result in a “redesigned fleet” which included a “refocusing” on long-haul flights, the company said. 

SAS, which already cut 40 percent of its workforce, 5,000 staff, in 2020, did not mention new job cuts.

The group did not specify when it expected to achieve the 7.5 billion annual reduction in its costs.

Last year, SAS widened its losses after an already disastrous 2020, with a net loss of just over 2.4 billion kroner, with rebounded turnover of about 5.5 billion. 

In the early hours of trading on the Stockholm stock exchange, SAS shares, which have taken a hit in recent days amid concerns about its financial situation, gained over five percent to 1.13 kroner. 

At its current price, however, the company is only worth about 800 million euros.

SAS has benefited from several aid and recapitalisation plans since the start of the pandemic, mainly funded by Sweden and Denmark, which each own 21.8 percent of the company.

READ ALSO: SAS shares plummet after analysts warn it risks going bankrupt

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TRAVEL

SAS pilots approve new collective agreement

93 percent of Danish SAS pilots have approved the agreement that ended strike action last month.

SAS pilots approve new collective agreement

93 percent of the Danish SAS pilots have voted yes to an agreement which ended strike action but also means, among other things, redeployments, longer working weeks and lower wages.

This was announced by Dansk Metal on Saturday morning. The pilots could have voted yes or no on the new collective agreement until midnight on Friday evening.

Pilots in Sweden and Norway have also approved the agreement.

Keld Bækkelund Hansen, head of negotiations at Dansk Metal, said “I am incredibly happy. It is a bit atypical to see that a collective agreement negotiation ends in agreements being made that reduce wages and conditions.”

“So of course it was exciting how our members viewed the new collective agreement. But they could also see that it was a necessity in relation to SAS’s situation,” he added.

The agreement comes after months of tug-of-war that finally saw SAS and the striking pilots reach a collective agreement on 19 July. It helped end a two-week strike.

Part of the background to the conflict between SAS and the pilots was that, during the COVID-19 pandemic, SAS dismissed around half of its pilots.

With the new collective agreement, however, all 450 dismissed pilots will be offered re-employment in the future.

At the same time, SAS pilots will see a 25 percent pay cut, and the limit for the workload is raised from 47 hours to 60 hours per week.

But even with strike action over and a collective agreement supported by pilots, the problems are far from over for SAS, which has suffered major financial losses during the conflict.

Currently, the airline plans to begin a reconstruction in the United States under bankruptcy protection in a so-called Chapter 11 process.

Bankruptcy protection will mean that SAS can continue to operate and pay wages while the process is ongoing.

SAS is seeking financing of up to $700 million- slightly more than DKK 5.1 billion.

SAS press manager Alexandra Lindgren Kaoukji said in a statement: “We are very happy and look forward to continuing our ongoing Chapter 11 process and our work to ensure a strong and sustainable airline for many years to come.The positive result of the vote will help SAS to attract long-term investors while we go through the Chapter 11 process and work further with the SAS Forward plan.”

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