More turbulence looms at SAS

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Long-troubled Scandinavian Airlines (SAS) had seemed to have won a reprieve earlier this year, when it finally called a truce of sorts with its myriad labour unions. New declines in passenger traffic and ongoing effects of the global finance crisis, though, mean SAS needs to cut costs again, and that’s stirring up new trouble.

SAS, partially owned by the three Scandinavian governments, has seen paid passenger miles decline by 9.4 percent from May 2008 to May 2009, while they’re down 7.8 percent just in the period from January to May this year.

Load factors, meanwhile are now running around 73 percent, while paid cargo miles were down nearly 22 percent in the first five months of the year.

The global finance crisis has led to a sharp decline in both business and leisure travel, and SAS certainly isn’t alone in the tough airline market. Airlines in the US are slashing routes and even giants like Air France-KLM are reporting significant declines in their numbers of passengers. Finnair of Finland has been hit among the hardest, with passenger counts down 13 percent in June.

SAS was close behind, with a 12.9 percent decline after 2,4 million passengers flew with the airline in June. That’s 350,000 fewer than in June of last year.

SAS management, already in the midst of a “Core SAS” program to cut SEK 4 billion in costs, says the airline now needs to cut another billion kroner. It’s busy reducing capacity but newspaper Aftenposten notes its program has focused on the Nordic market, where business travel is way down. SAS chief executive Mats Jansson nonetheless claims the airline is “getting a better balance” between its capacity and demand.

On Monday, however, the airline failed to get all of its 39 unions to agree to 6 percent pay cuts. That will probably result in a new round of layoffs, say SAS officials. SAS Danmark, the Danish division, has already been told it needed to cut 70 more jobs.

On a brighter note, SAS’ Norwegian commuter airline Widerøe was the only SAS unit to see a passenger increase in June. Its numbers were up 1.1 percent despite reduced capacity.