SAS forced to announce new savings plan

Despite positive third-quarter results the airline needs to cut an additional five billion kroner

October 31st, 2012 10:16 am| by admin

SAS released its third quarter results ten days early yesterday after intense media speculation lead the Nasdaq stock exchange to suspend the trading of the airlines shares.

Trading resumed after SAS’s announcement, which confirmed rumours that the troubled airline would be embarking on a new round of spending cuts.

In a press release, the company said it hoped to cut an additional 2.6 billion kroner and also raise another 2.6 billion kroner by selling off non-core assets.

While the savings plan has yet to be finalised, reports last week suggested that SAS had demanded many employees would be asked to reapply for their jobs and take pay cuts of up to 25 percent, while others have been offered voluntary redundancies.

“I think SAS’s has incredibly sharp leadership at the moment,” SAS-expert Richard Björnelid, told Berlingske newspaper last week. “There is talk of a 25 percent pay cut. That is the information I have received from a centrally placed source. I suspect SAS’s leadership will simply say, 'This is what matters, take it or leave it.'”

One of the main financial challenges SAS faces is changes to the way that pensions are accounted that means it faces a multi-billion kroner bill in 2013.

The new round of savings comes a year after the airline implemented another savings plan called 4Excellence. But while the new round suggests 4Excellence did not cut deep enough, SAS argues it has benefited from it.

“In a very difficult and competitive industry environment, the positive development in Q3 is proof that implementation of the 4 Excellence strategy has proceeded according to plan,” SAS stated in the press release, adding it would provide further updates as the developments occur.

SAS managed to increase passenger revenues by nine percent and reduce the cost per passenger per journey by six percent after implementing 4Excellence.

The company also announced third quarter pre-tax profits of 491 million kroner.

According to the Ritzau news bureau, it was rumours that negotiations had failed between SAS and the company’s creditors that led Nasdaq to suspend trading of SAS shares yesterday. This, in turn, forced SAS to release its third quarter figures early.

In the press release SAS writes, however, that it is still negotiating the 4.7 billion kroner loan with its creditors.

We can see the problems now, and that's making our politicians very nervous (photo: iStock)
You’re Still Here: We can see clearly now …
My dog listens to talk radio while we are out, which means I listen to ta...
The new parliamentary year officially begins (photo: Hasse Ferrold)
Folketinget officially kick-starts new parliamentary year
Folketinget, the Danish Parliament, officially began its new parliamentary ...
The new post centre in Taastrup will sort letters in a more efficient way (photo: iStock)
Post Danmark to lay off 135 employees
Post Danmark will lay off some 135 employees when the company moves from it...
Those who fail to come to a scheduled examination are likely to worsen their health problems, a doctor from Bispebjerg Hospital warns (photo: iStock)
No-shows at hospitals costing Denmark significant resources
Every year, tens of thousands of patients miss an appointment for scheduled...
Kristian Thulesen Dahl is the current leader of Dansk Folkeparti (photo: News Øresund)
Dansk Folkeparti celebrating 20th anniversary
Dansk Folkeparti (DF) is celebrating its 20th anniversary today. The rig...
The shots were fired into a building (photo: iStock)
Shots fired at estate agent’s in Copenhagen
Five to six shots were aimed at an estate agent's office on Smedtoften in t...