Credit Crunch

SAS To Axe 3,000 Jobs After Record Losses

On Tuesday Scandinavian Airline Systems reported a net loss of 757 million dollars for 2008, the worst figures in its history. As a result, SAS announced a restructuring of the company,  reducing its fleet, as well as slashing the workforce by 3000 employees.  An additional 5600 employees will be leaving through outsourcing.

The part-state owned company, with its headquarters in Stockholm, plans to raise 6 billion kronor(720 million US dollars) from its shareholders. 

SAS also announced plans to focus more on business travellers in the Nordic market in the future. Unprofitable routes would be closed down.

The Scandinavian airline also struck a deal to sell most of its money-losing Spanair unit to a Spanish consortium for one euro.

The news caused shares of SAS to plunge 20 percent.

Chief Executive Mats Jansson said the changes would make the company ”profitable and competitive,” after what he called ”one of the most challenging and turbulent years.”

”During the year, we saw a period of record-high oil prices, a financial crisis that heavily intensified during the final quarter and which led to an economic recession in many markets,” Jansson said.

Minister for Enterprise and Energy, Maud Olofsson, said at a press conference on Tuesday afternoon that although the government feels a strong sense of responsiblity for the taxpayers’ money, they have faith in the abilities of the SAS board of directors and the new business plan that has been presented.

When asked about any alternative courses of action that could be taken by SAS, Olofsson said she was only prepared to discuss the proposal that the board had submitted.

”However, during my years as Minister we have often discussed how we can make the company more profitable, and one result of these is the new business plan which has been presented by SAS,” said Olofsson to Swedish News Agency TT.

She would not comment on whether SAS would be bankrupt without this contribution.

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