SAS cuts 650 jobs

Troubled Scandinavian airline SAS has announced a new share issue to raise 5 billion kronor ($674 million) as well as a programme of cuts and savings designed to save a further 2 billion kronor.

• SAS reports profits hike (5 Nov 09)
• SAS shares soar on union deal rumours (30 Sep 09)
• SAS slashes workforce to save cash (12 Aug 09)

The new rights issue is supported by the airline's major owners, SAS confirmed in its annual report statement on Tuesday.

The new round of cuts means that the Core SAS savings programme will lead to a total cost reduction of 7.3 billion kronor and will include the loss of a further 650 jobs within the concern across Scandinavia.

"This will mainly affect administration," according to Bertil Ternert at SAS.

The previously advertised programme of savings affected 3,000 staff.

SAS also states that it has reached an agreement with unions representing pilots and cabin staff, which includes "clearly stated goals" over savings of a further 500 million kronor.

SAS confirms that it has reached an agreement with banks to improve the airline's credit conditions. The firm has begun negotiations to secure the refinancing or delay of deadlines for the majority of the bonds which fall due during 2010.

The new rights issue, aside from having secured the support of major shareholders, is also backed by a consortium of banks. The conditions for the right issue will be made public on April 6th. The issue requires the approval of an extraordinary board meeting planned for April 7th.

SAS reported a pre-tax loss of 1.52 billion kronor for the final quarter of 2009. This can be compared with losses of 360 million in the corresponding period of 2008.

Turnover in the period amounted to 10.32 billion kronor in comparison to 12.82 billion in 2008.

Analysts had forecast a loss of 506 million kronor and a turnover of 10.26 billion, according to a Reuters poll.

The Swedish state and the other main shareholders have backed the rights issue on the condition that negotiations with staff are concluded and that the bonds are refinanced.

"When the firm, staff, creditors and owners all pull together then SAS can be a competitive company," Enterprise Minister Maud Olofsson said in a statement.

"We have analyzed and valued the measures which the management has proposed. Our judgement is that the plan is a prerequisite to creating a competitive SAS and giving the Swedish taxpayer a competitive return on invested capital."

After the completion of the rights issue, the Swedish state will retain its stake of 21.4 percent - requiring an investment of some 1.07 billion kronor on the part of the state.

"When these cost cuts have been completed then SAS will be able to compete against the toughest competition, which is an asset for industry and jobs in Sweden," Maud Olofsson said.

SAS passenger numbers declined in January by 5.1 percent in comparison with the same month in 2009. The so-called cabin factor, which indicates how full the planes are, climbed 4.9 percentage points to 65.6 percent.