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New savings plan aimed at giving a life back to struggling airliner SAS

Monday, 12 November 2012
On Monday morning, SAS management presented a savings plan that is expected to lift the ailing Scandinavian flagship airliner, SAS. In the interim report presented today, SAS will get rid of 800 employees in Sweden and overall to knock off 6000 services and employees.

The aim is to save money and help the persistently struggling company to remain afloat. According to SAS, the plan will result in total annual savings of around Skr 3 billion and will also see some of SAS's assets being sold at a value of around Skr 3 billion. This will make SAS less dependent on external lenders in the future.

SAS also claim to have reached an agreement with the lenders, which means that the existing loans of Skr3.1 billion is to increase to Skr3.5 billion and extended to the end March 2015.
"The Board has given its unanimous support to this plan and recommends that all of the company's employees support it as well. The Board will meet again on Sunday November 18, 2012 to decide if the conditions for the implementation of the plan exist," writes SAS.

In the morning presentation, SAS CEO, Rickard Gustafson, identified that the number of employees will fall from about 15,000 to 9,000. Most of  the areas affect is related to sales which will mostly be outsourced.

SAS wants to negotiate collective agreements with employees and will begin negotiations shortly. That the union agrees to the new collective agreements is a prerequisite for the loan to be approved, SAS writes in the press release.
SAS says that compensation levels for employees is to be reduced and that new pension terms are also included in the savings package.

According to company CEO, Rickard Gustafson, the salaries for the staff id to be reduced by up to 15 percent.
"On average, flight personnel, will see their salaries reduced by 12 percent. There should be a ceiling so that no one should have to reduce his/her salary by more than 15 percent,"said Rickard Gustafson during this morning's press conference.

For the management team, their own wages is to be reduced by between 15 and 23 percent and negotiation with workers unions is to be commenced.
But according to various Scandinavian media reports, workers unions are poised to reject the saving package. Yesterday union leaders and representatives criticized any pay cuts.
"It does not matter if it's 10 or 15 percent - just forget it. We have given more than ten years and now we have nothing more to give," said Asbjørn Wikestad, a union representative to the Norwegian network NRK .

The Scandinavian governments seem to have welcomed the new business plan.
The Swedish state will not contribute any money to the airline, but is prepared to secure the company's access to liquidity.

"The facility is a loan commitment and not a capital contribution," the government said in a statement.
The government also writes that the ambition is still to find a new owner for SAS and believe that the new business plan for the company is more attractive to a potential owner.

SAS CEO Rickard Gustafson confirmed during the press conference that SAS is negotiating with a potential buyer.
In the quarterly report, where parts of it is already made public, it shows that SAS makes a quarterly profit of Skr568 million.

SAS assets to be sold o the regional airline Widerö, are ground handling operations (Ground Handling), airport-related buildings and aircraft engines. "In addition, SAS also actively evaluating opportunities to realize further value from its funded aircraft portfolio and other assets," writes SAS in the press release published on Monday.
by Scancomark.com Team


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