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No future for SAS in Europe: expert

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No future for SAS in Europe: expert
17:13 CET+01:00
Despite Scandinavian airline SAS announcing on Monday that all eight unions had signed deals to save the company from bankruptcy, one analyst has predicted that the company needs to change tack if it wants to stay airborne.

“It's like the meaning of life – it's complicated,” airline industry consultant Anders Lidman told The Local.

“And it hasn't even really started yet, there's a long way to go.”

Lidman's comments come after the announcement that all eight SAS unions signed new labour agreements with the troubled airline, a precondition for SAS to move ahead with a comprehensive cost-cutting plan touted by management as the only way to save the airline from bankruptcy.

The new union agreements include centralization of administration functions, reduction of compensation to market levels, new pension terms and outsourcing of call centers and ground handling, the airline said in a statement.

The airline's staff members agreed to pay-cuts, longer work hours and a time-out on salary negotiations for at least two years.

Some pilots have essentially received a 30 percent pay cut, with extra hours to boot.

However, the fact that negotiations came to a close was a foregone conclusion, according to Lidman.

“If it's a choice of a job or not I can't say I'm surprised. It's not so easy to get jobs these days. And it's not as if the pilots were starving anyway,” he told The Local.

Lidman explained that since SAS lost its monopoly status following deregulation, the company has suffered to adjust to new market conditions.

He pointed to a flight between Madrid and Stockholm costing a quarter as much today as it did in the eighties, even though costs are much higher now in comparison.

“All the other airlines drew the conclusion that you can't make money unless you're a low-cost airline,” he said.

“But SAS has kept its traffic where it's the worst – Europe.”

In terms of the next step for the airline, Lidman criticized SAS's lack of a new plan, stating that changes must be made to avoid further turbulence.

“I can't see a future for SAS if they stay in Europe. They will have to work out a plan and I can't see a positive plan for them to move forward. They've not announced any change of direction and they must do this to survive.”

Meanwhile, passengers should keep an eye on developments, but have no cause for concern, according to Lidman.

“There's no need to worry now, but passengers should be aware of the situation, and should be keeping an eye on the company,” he told The Local.

Oliver Gee

Follow Oliver on Twitter here

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