SAS eyes final union deal for survival

Scandinavian airline SAS on Jan 14 sought a deal with the last union opposing its plans for severe cost cuts aimed at avoiding bankruptcy and securing the airline’s long-term future.

According to Today Online, SAS, which is half owned by the governments of Sweden, Denmark and Norway, said it had secured a deal with seven of eight unions on wage cuts, working schedule changes and pensions and had only the cabin crew union of Denmark to go.

The airline, hit by competition from lower-priced rivals, last week announced plans to cut some salaries by up to 17 per cent and lower overall staff to about 9,000 from 15,000 as it shrinks its business. That prompted media speculation SAS faced bankruptcy if it failed to get unions to agree to the cuts.

But even if a deal is reached, analysts have questioned whether the airline can survive on its own in the long term as it faces competition from Ryanair and regional rival Norwegian Air Shuttle, both of which have lower operating costs.

“We have successfully negotiated seven of eight collective (union) agreements, which is gratifying,” SAS Chief Executive Rickard Gustafson told journalists during talks with unions at the main airport in the Danish capital Copenhagen.

“But there remains one union and we must have it on board too. That is a condition for carrying out our plan.”

The airline needs to get agreement from all eight unions as a condition of a 3.5 billion Swedish crown (S$628 million) loan from the governments and six banks.

Progress in the talks sent SAS shares soaring.

In late morning trade Monday in Stockholm, the stock was up 25 per cent at 6.95 Swedish crowns. Since the start of 2011, the stock has lost 69 per cent of its value to be worth under 2 billion Swedish crowns.

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