SAS has restructured its airline and other holdings into four new business divisions raising talk of spin-offs as the Scandinavian group continues its bid to cut costs.

The parent SAS airline and its commuter carrier will form a core airline division. Other airline operations will go into a separate division, which includes Braathens and Spanair, in which SAS recently acquired majority control, as well as Wideroe, Air Botnia and other regional affiliates. A third airline support unit will include SAS Cargo alongside ground handling, technical and sales services. A final division brings together "airline-related" businesses ranging from aircraft trading and the flight academy to IT and travel retail. Hotels is also loosely attached to this unit.

Jorgen Lindegaard, who arrived as president of the SAS Group last May, has now announced two restructuring plans within the space of a year. Upon his arrival, Lindegaard had refocused the group around the core SAS airline operation. "A structure is being created that will generate new business opportunities for service units, as well as opening new possibilities for other group companies." He adds that there will also be a "more distinct distribution of roles" between airlines within the company.

However, splitting the group into separate profit centres raises the possibility of spinning off non-core assets. Although the airline has given no public sign that this is its intention, unions have already voiced their fears. An early casualty has been the highly regarded Marie Ehrling, whose role, effectively as deputy president, is not included in the new structure.

SAS has been badly hit by the downturn in the Scandinavian economy, and particular the sizeable telecoms sector. Business traffic has struggled to move out of an annual drop in the 15% range since October last year. The carrier's response has been Scandinavian Direct, a single-class product for the local market. This goes into service in June and is likely to be expanded on to European routes if it proves successful.

Ryanair has made no secret of the fact that Scandinavia is high on its hit list as the aggressive low-fares carrier expands its presence in Europe, with Stockholm a likely target for a new base. This has added a sense of urgency to the carrier's bid to restructure what has traditionally been one of the highest cost bases in Europe.

Source: Airline Business