SAS Group is to shed thousands of jobs in a sweeping restructuring that involves divesting airline shareholdings, outsourcing operations, fleet cuts and raising SKr6 billion ($720 million) through a rights issue.
In a re-organisation to focus on its Scandinavian market it will divest its shareholdings in bmi, Estonian Air, regional carrier Skyways, Air Greenland, and other companies. SAS Group has already agreed to sell its Spanair and Air Baltic shares.
SAS will reduce capacity to focus on profitable business routes and will axe 16 aircraft from its main carrier Scandinavian Airlines' fleet - two long-haul and 14 short-haul. It expects to cut the number of routes by 40% and capacity by a fifth.
The overhaul is designed to concentrate activities on business destinations. Most of the routes to be discontinued, it says, are leisure connections. SAS has since confirmed cuts include Copenhagen-Seattle and Stockholm flights to Beijing and Bangkok, though there are extra flights to the Asian cities from Copenhagen.
Some 8,600 positions will be affected under the Core SAS programme. About 3,000 jobs will be lost while the remaining 5,600, of which 3,000 are linked to Spanair, will be associated with the divestments and outsourcing.
As part of the plans SAS Group is to eliminate its three separate airline subsidiary companies, as well as its long-haul arm, and instead centralise their operations in Scandinavia by setting up three new base organisations at Copenhagen, Stockholm and Oslo with responsibility for both short-haul and long-haul operations. It effectively reverses the move, five years ago, to split the Scandinavian Airlines operation into separate Norwegian, Swedish and Danish carriers - each with overall national responsibility - plus the SAS International long-haul division.
SAS Group estimates that Core SAS will reduce revenue by around a quarter but generate a SKr7 billion improvement in earnings compared with its 2008 full-year figures. It has just recorded a heavy full-year net loss of SKr6.3 billion for 2008, though much of this is related to the planned sale of Spanair. It has agreed to sell Spanair to Spanish investors and has braced itself to absorb a SKr4.9 billion impact from the transaction.
The group will also seek approval for a planned SKr6 billion rights issue in March to support the restructuring and says its three Nordic government shareholders support the plan and intend to participate. Once complete the rights issue will increase the group's equity from about SKr9 billion to SKr15 billion.
Source: Airline Business
