SAS, which has been in a pretty dire financial situation, announced that is has secured loans from banks and its government owners after announcing a pretty drastic restructuring plan today. The short version:
– They are looking to sell regional airline Wideroe as well as its ground handling division.
– Corporate staff will take 17% paycuts; cabin staff will take 12% paycuts.
– 6,000 people (out of a staff of 15,000) will lose jobs.
– Changing the terms of their pension payouts.
These moves hope to save about $500 million.
The airline felt significant pain in Europe because of low fare competition. What’s concerning, though, is that SAS needs to restructure their business – it would appear that they will simply continue doing what they do now, albeit with lower costs. That’s not a recipe for long-term success. That said, it’s a legitimate question to ask whether SAS needs to exist at all. Their intra-Europe product is barely differentiated from their low cost competitors, and their long-haul route network doesn’t have nearly the reach of other European carriers near the region.
Finnair has positioned itself as an easy connecting point for service to Asia, and they’ve grown business to that region significantly over the years. Meanwhile, SAS only flies to 4 destinations in Asia.
SAS’ CEO has said this restructuring is SAS’s last chance – I fear it will be gone soon enough.