SAS cuts to hit hard in Norway

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Pay cuts demanded by management at long-troubled Scandinavian Airlines (SAS) are expected to hit hardest in Norway, because Norwegian workers are paid higher salaries than their Swedish and Danish colleagues. Around 500 SAS jobs in Norway may be eliminated as well.

Few argue that SAS’ Norwegian division must take its share of new cost cuts needed to help SAS meet ever-growing competition from newer, low-cost and low-fare carriers like Norwegian Air, EasyJet and RyanAir. SAS has had a tough time adjusting to the new unregulated world of the airline industry. Now, management claims, time is running out.

SAS leaders are still up against a wide array of strong unions, not least in Norway. The unions have fought tough battles for years to secure attractive wages and benefits for their members and often have resisted management attempts to cut SAS’ costs. Some union bosses, like John Lyng of the flight attendants’ union in Norway, appear poised to do so again. He doesn’t like the comparisons made among Swedish, Danish and Norwegian pay levels, and immediately blasted the demand for pay cuts.

SAS chief executive Mats Jansson, though, made his position perfectly clear: Any strike at this point would be like “playing Russian Roulette” with SAS’ future.

Jansson wants employees to take a 20 percent pay cut. He wants to cut 1,500 jobs systemwide and renegotiate all agreements with SAS’ myriad unions. After reporting a second-quarter loss of more than a million Swedish kronor on Wednesday, Jansson says SAS simply has to cut another SEK 2 billion in annual costs, on top of SEK 4.5 billion already announced and approved.He was even more blunt about the consequences if SAS employees don’t accept pay cuts, according to newspaper Aftenposten : “We’ll be in deep shit. Deep, deep shit.”

The Norwegian portion of the Scandinavian carrier will face some of the toughest demands. If Norwegian pilots and flight attendants don’t accept pay cuts, for example, SAS could replace them with lower-cost Swedes.

Jansson noted that a flight staffed by a Swedish crew is 30 percent cheaper to operate than one staffed by a Danish crew, and even cheaper than one staffed by Norwegians.

Each SAS pilot, meanwhile, costs the company around SEK 2.1 million a year including salary, pension and insurance benefits and administration. Jansson says that’s 40 percent higher than the cost of pilots for rival Norwegian Air, and SAS’s cockpit costs must come down.

Ola Strand, head of SAS Norge, agrees that SAS in Norway must take its “relative share” of cost-cutting at the airline. Asbjørn Wikestad, an employee representative on SAS’ board, also agrees.

“This is all about surviving or not,” he told Aftenposten . “If we don’t do something, we might as well just turn off the lights.”