Beleaguered Scandinavian airline SAS has unveiled a last-ditch plan aimed at securing the additional 2.8 billion kroner in revenue the airline needs each year in order to keep flying. Announced today in Stockholm, the plan hinges on employees accepting an average 12 percent wage reduction.
Employees will be asked to accept wage and pension reductions, fringe benefit cuts and longer working hours. The plan, which would also consolidate administrative activities at the airline's head office in Stockholm, is designed to bring the SAS work force down from around 15,000 to 9,000 employees.
The aggressive plan, named 4Excellence Next Generation, is also expected to find savings by trimming away some 6,000 jobs through the sale of subsidiary companies SAS Ground Handling and Widerøe, a regional airline, as well as by discontinuing about 800 administrative jobs.
“SAS is facing major and necessary changes," Rickard Gustafson, SAS’s managing director, said. “4Excellence Next Generation enables us to establish an entirely new platform for SAS’s future. It is a comprehensive plan that places significant demands on the entire organisation, but which is necessary to address the conditions prevailing in the market.”
The airline has given employees’ unions six days to accept the plan. Should they do so, the plan will go into effect on November 18.
“This is our ‘final call’, if SAS is to continue. We have been given this last chance to start from scratch and implement these fundamental changes. I realise that we’re asking much of our employees, but there is no other way. I hope our loyal and dedicated workers have the will to fight for SAS’s survival.”
In order to reach the financial goals by 2015, SAS has received credit lines in excess of 3 billion kroner from seven banks and the three Scandinavian countries of Denmark, Sweden and Norway, who together own 50 percent of SAS shares. In certain cases, the participation of the Scandinavian states is subject to parliamentary approval.
SAS has implemented a number of savings plans in recent years that have led to its workforce being cut each year since 2004, when 32,481 people were employed.
The first plan came in 2002, when the Turnaround 2005 plan slashed 6,000 jobs. In 2007, Strategy 2011 plan resulted in subsidiary company SpanAir being sold and just a year later, in 2008, the Core SAS plan eliminated 4,500 jobs while pilots and cabin personnel were asked to accept wage reductions of up to 20 percent.
The airline flew to 146 destinations in 2004, but to only 128 in 2011. Additionally, it had 215 planes at its disposal in 2011, compared with 297 in 2004.
Today's announcement was made as SAS presented third-quarter results showing that net profit had doubled to 434 million Swedish kronor as sales rose 5 percent to 11.1 billion kronor (1.6 billion).