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Friday, June 21, 2024

SAS tries to head off another crisis

UPDATED: Weeks of new crisis speculation that’s been swirling around long-troubled Scandinavian Airlines (SAS) effectively forced the company to reveal on Tuesday that it finally will post a third-quarter operating profit, but still must undergo another round of major cost-cutting. SAS personnel, however, aren’t willing to take another pay cut.

SAS still can’t seem to get its overall financial situation off the ground. PHOTO: SAS

“The situation in SAS is serious,” Asbjørn Wikestad, leader of SAS Personnel Club, told Norwegian Broadcasting (NRK) after management called unions in for a meeting Tuesday afternoon. “But we are absolutely not willing to take pay cuts.” Wikestad said pay at SAS stagnated 10 years ago, “and that was our contribution to get SAS on its feet again. But now the pay is so low that we have trouble recruiting folks.”

SAS’ major shareholders still include the governments of Sweden, Denmark and Norway, which earlier have provided fresh capital to help keep the airline flying in the face of increasingly tough competition in the airline industry.

Stock analysts and various media outlets in Sweden and Denmark have been reporting recently that SAS now needs even more capital, to meet looming pension funding requirements among other financial obligations. SAS officials have refused to comment on reports that it thus plans to sell off its profitable domestic airline in Norway, Widerøe, and other assets.

On Tuesday, however, the Stockholm Stock Exchange suspended trading in SAS’ shares, in practice forcing SAS to provide some third-quarter financial information on Tuesday in advance of its planned release of results next week. Swedish newspaper Dagens Industi had earlier reported that trading was halted to ensure fairness given all the rumours and speculation about SAS’ future.

SAS responded with a press release in which it said the company will report a positive operating result of SEK 568 million but that it also must save around SEK 3 billion (NOK 2.6 billion, USD 440 million) to get its costs under control.

That’s likely to lead to sales of assets that are not considered part of the airline’s core operations, according to SAS. Norway’s government minister in charge of state investments in companies, Trond Giske, has earlier said the Norwegian government won’t provide any more capital for SAS.

SAS called in all employee representatives to a meeting in Copenhagen Tuesday afternoon. There’s been massive speculation that employees will have to accept another pay cut and that thousands will be affected by the airlines’ savings program.

Views and News from Norway/Nina Berglund

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