SAS slashes workforce to save cash

Scandinavian airline SAS has announced cuts of 1,000 to 1,500 jobs as part of a new austerity programme to shave 2 billion kronor ($274 million) off its outgoings.

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The airline's various savings plans now total 4.5 billion kronor and its workforce will be ultimately be reduced to 1,500 staff.

Restructuring costs have come in higher than projected and have increased by 800 million kronor to 1.70 billion kronor for the full year 2009.

In total 1,066 full-time staff have left the concern and seven aircraft have been taken out of service. A further 14 aircraft will be grounded during the remainder of the year.

Passenger numbers continue their dramatic decline in the second quarter, down 17.1 percent.

The airline reported a pre-tax loss of 1.039 billion kronor for the second quarter, in comparison to a profit of 131 million kronor in the corresponding period of 2008.

Turnover amounted to to 12.223 billion kronor in comparison to 14.412 billion a year earlier.

According to a survey compiled by Reuters, analysts had expected a pre-tax loss of 1.143 billion kronor and a turnover of 12.123 billion.

Growth is expected to be negative during 2009, CEO Mats Jansson confirmed. It remained uncertain when the recovery would begin with SAS expecting further falls in passenger numbers in 2009.

Mats Jansson announced plans to push through significant pay cuts for aircraft staff.

SAS explained in its report that both the new savings measures and the previous CORE program are designed to slim down the airline's costs to closer to those of its rivals.

"In sum SAS has to compete on the same conditions as the competition, which is ultimately a question of survival," Jansson said.

SAS staff costs are an average of 20 percent higher than many of its competitors.

Claus Sonberg at SAS explained that it can not be ruled out that Norwegian cabin staff are replaced by cheaper Swedes.

"In the long term we can not compete on different conditions and have more expensive staff than, for example, Norwegian," he explained.