Ailing SAS Scandinavian Airlines launches cost savings plan to raise new capital

Ailing SAS Scandinavian Airlines on Feb. 22 launched a cost savings plan and said it hoped to raise new capital after posting a wider quarterly loss as it grapples with weak demand and tough competition.

SAS said it would cut salaries and more jobs as part of a new restructuring plan that is dependent partly on the support of labor unions, as the Scandinavian airline carrier tries to convince investors of its long-term future, The Wall Street Journal reported.

The airline, partly owned by the Swedish, Norwegian and Danish governments, said its new plan will include cost savings of around three billion Swedish kronor ($445 million), outsourcing parts of customer service and improvements to information technology.

SAS, which is also planning asset sales of three billion kronor, including a stake in Norwegian carrier Wideroe, said its major shareholders and creditor banks have agreed to increase the size of an existing credit facility of 3.1 billion kronor to 3.5 billion kronor and to extend the term until March 2015 so long as the company implements the restructuring plan.

The company will have to renegotiate the collective agreements with its labor unions to carry out the plan. SAS said the cost-saving plan also includes around 800 job cuts from the current workforce of around 15,000 and pay reductions of about 15%. Through streamlining measures as well as outsourcing and divestments of units including Wideroe, SAS’s head count would fall to around 9,000.