"final call" for the troubled airline

SAS awaits union response to crisis plan

Published måndag 12 november 2012 kl 08:59
Updated, måndag 12 november 2012 kl 18:07
SAS-plan parkerat på Sturup flygplats. Foto: Johan Nilsson/Scanpix.
A Scandinavian Airlines aircraft.

Scandinavian Airlines, SAS, has presented a package of measures in a new attempt to stave off bankruptcy. Unions are against the large lay-offs in the rescue package but management say it's a final call to save the airline.

Scandinavian Airlines, SAS, has been struggling to stay afloat for over a decade. A string of savings packages have proven inefficient and the threat of bankruptcy has been looming for a long time now.

Today, the airline presented a package of measures to avoid bankruptcy, including clearing a loan of SEK 3.5 billion and selling off assets worth SEK 3.billion.

The staff will be reduced by 6000 through outsourcing and layoffs. Those who remain may face pay cuts of up to 20 per cent.

The airline also plans to introduce new pensions savings terms for employees and has said that it wants to start negotiations regarding new collective agreements as soon as possible. Administrative services will be centralized in Stockholm.

SAS CEO Rickard Gustafson described the new rescue plan as the airline's "final call".

"We are asking for a lot, but there really is no other way out," says Rickard Gustafson. "This is our final call. We have received a final chance to start over but it requires a full implementation of the plan."

The unions, however, complained that they have been faced with an unfair ultimatum and that they have been left out of negotiations over a new collective agreement.

That is unacceptable, sayid Robert Gustavsson, head of the SAS section of the Swedish Airline Pilots Association.

"We in the union feel that the management are avoiding their responsibility and are allowing owners and banks to dictate the terms of a collective agreement," says Robert Gustavsson.

"We believe that goes against Swedish labour market regulations."

One flight attendant, who asked to remain anonymous, told news agency TT, that she and her colleagues have experienced the proposal, especially the part entailing employees work more hours, more or less as a "take it or leave it" order. She says working more hours is also a form of cutting salary. 

The new loans deal had been drafted together with seven lenders. SAS's main owners - the Swedish, Norwegian and Danish states as well as the Wallenberg banking- and industry group - are part of the settlement, which is subject to approval by the Scandinavian parliaments.

The Swedish state has decided not to contribute any new finances for SAS. Instead, it wants to find new owners for the troubled airline.

Peter Norman, the Swedish minister for financial markets, says the government's ambition is to sell SAS.

"We tried to sell our share for one and a half years and it became obvious that nobody wanted to buy SAS," says Peter Norman.

"Now we are making an attempt to render the company more competitive. When that has been achieved, the likelihood of a successful sale at a later point will be larger."

The latest crisis for SAS comes out a time when the financial crisis in Sweden and Europe at large looks set to deepen. In the airline industry, low-cost airlines such as Norwegian Airlines look set to be the main profit makers.

By Monday, no negotiations had started, according to TT, despite the fact that SAS CEO Rickard Gustafson says everything must be ready by Sunday, before the board meets again. By then, the unions in all three countries must be united in a decision.

The cuts and layoffs may be SAS's final chance to adjust to the new, harsh and competitive climate. But it will happen at great cost to the airline's employees.

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