SAS sells airlines and quits HQ to cut costs

Scandinavian Airline System ( SAS ) has announced plans to save 2.8 billion kronor ($400 million) between now and 2011, selling subsidiaries including Spanair and moving from its Stockholm headquarters.

SAS sells airlines and quits HQ to cut costs

The company said it aimed to be generating annual profits of 4 billion kronor between now and 2011. As well as selling its Spanish subsidiary Spanair, the company will sell its 20 percent shareholding in BMI and its 37.5 percent stake in Air Greenland.

The company will also review the structure and roles of SAS Ground Services, SAS Technical Services and its terminal services operation Spirit.

The measures are expected to be put in place between 2007 and 2009. The group said it hoped to increase passenger numbers by 20 percent.

“The airline market is changing rapidly. We want to be in the forefront in terms of giving customers the best service and the most attractive fares,” said SAS CEO Mats Jansson .

Jansson also said that a new ‘cooperation model’ would be established with unions.

“We have to abandon the strike culture that has long existed at SAS,” adding that the company needed a new customer-oriented culture.

“This will ensure our future as a strong and independent airline and also give us an opportunity to involve employees in the value that is created through profit sharing and part ownership,” Jansson said.

SAS’s investor relations manager Sture Stölen said that the company expected to sell its shares in Spanair and BMI next year, although he said that the sale process had already begun.

“Regarding BMI, we are currently locked into a joint venture agreement with Lufthansa, which we hope to be able to dissolve next year.”

BMI, formerly British Midland, is the UK’s second-largest airline and owns 20 percent of take off and landing slots at London Heathrow Airport. Its founder and chairman, Sir Michael Bishop, owns 50 percent plus one share. Lufthansa owns 30 percent of the airline.

The group’s headquarters in Frösundavik, Stockholm, were sold several years ago and leased back by the company. The company now plans to leave the building as soon as possible, with Arlanda Airport the most likely destination for headquarters staff.

“A total of 700 people work in Frösundavik and they will become fewer. Of the total savings of 2.8 billion kronor, the central administration accounts for savings of 200-300 million,” said information director Hans Ollengren.

SAS brought forward the presentation of its strategy plan following leaks of the content over the past few days.

The price of the company’s shares rose on the Stockholm Stock Exchange following the announcement.


‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.