Comprehensive savings plan breathes new life into SAS
A comprehensive savings plan has been agreed to breathe new life into the struggling Scandinavian airline SAS. The cost slashing plan designed to make SAS more competitive includes moving the head office to Stockholm, with no administration in Copenhagen or Oslo. Overall across the organisation, there will be 6000 fewer employees in the company, which currently employs 15000. Redundancies will take place in Denmark, Norway and Sweden. The number of managers will be significantly reduced. Continuing employees may expect pay cuts of 15%.
The plan will result in SEK 3 billion and will also see some of SAS’s assets being sold at a value of around SEK 3 billion. This will make SAS less dependent on external lenders in the future.
The subsidiary SAS Ground Handling, Europe’s third-largest handling company which employs about a third of all employees in SAS, will be outsourced. The airline says it is in negotiations on a sale with unnamed external partners, but a takeover date has not yet been clarified. The company’s customer centres will also be outsourced.
Also the Norway-based airline Widerøe, which sees itself as the Nordic countries’ biggest regional airline, will be divested. The same applies to properties associated with airports and assets related to aircraft engines. Overall, the divestment of assets will raise €400 million in addition to total savings of around the same figure per year.
The radical new savings plan has been termed 4Excellence Next Generation (4XNG), referring to the previous 4Excellence strategic plan.
“This is our ‘final call’ if there continue to be an SAS,” Rickard Gustafson, CEO of SAS said in a statement this morning. “We have this last chance to start over and implement these fundamental changes. I know that we demand a lot from our employees, but there is no other way. I hope that our loyal and dedicated employees have the will to fight for SAS to survive and thus secure our jobs. If we do, we may in the longer term invest in new aircraft and develop our business so that SAS can continue to play an important role for many millions of people in Scandinavia.”
The plan will be implemented during 2013 and 2014. Banks approved the plan yesterday after the European Commission has also nodded its approval in recent days.
[pictured: SAS Airbus A340; courtesy SAS]