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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SAS pilots’ strike scheduled to begin on June 29th

A strike involving around 1,000 SAS pilots is scheduled to begin on June 29th, according to a second strike notice issued by the pilots’ trade union on Wednesday.

SAS pilots’ strike scheduled to begin on June 29th

The second strike warning is a normal step after a first notice, which was issued by the pilots last week.

Despite a second notice having been issued, it is not certain that strike action will actually take place. This is because the pilots could still reach an agreement with SAS prior to the confirmed date of the planned strike.

Should it go ahead as scheduled, the strike will take effect simultaneously for pilots in Norway, Sweden and Denmark. Pilots in the three Nordic countries have separate trade unions but the planned strike action is coordinated between them.

Danish pilots’ trade union, Dansk Pilotforening, last week issued the initial strike warning. The Danish union is part of SAS Pilot Group, which represents SAS pilots in Denmark, Norway and Sweden.

Pilots with the airline in Sweden and Norway also issued strike notices in line with the Danish announcement.

The collective bargaining agreement by which the pilots’ salary and working terms are determined expired in April. Pilots are currently working under the terms of the expired deal.

But the expiration of the collective bargaining agreement also means that the pilots are not bound by a commitment not to strike. They can therefore legally do so provided they give two weeks’ notice.

The creation of two SAS subsidiaries, SAS Connect and SAS Link, is reported to have generated an obstacle in negotiations over a new collective agreement.

READ ALSO: What is a Danish collective bargaining agreement?

Meetings between the various parties are ongoing this week under the auspices of the Swedish negotiating institution for collective bargaining agreements, Danish news wire Ritzau writes.

The dispute between the two sides comes as SAS leadership attempts to implement a recovery plan for the airline, which is mired in debt.

SAS wants to raise capital by selling shares and also has a cost-cutting plan in place.