Although it will, for the time being at least, remain as a single brand, the SAS Group is splitting itself into three different companies in each of its home Scandinavian countries.
The move to establish independent companies in Denmark, Norway and Sweden will return the multinational consortium to an ownership structure it discarded in 1951. The initiative recognises that there are very different labour and market conditions in each country, and that by running the units independently, each can respond faster and more appropriately to local needs, says SAS.
A major reason for the move is to enable local management to negotiate labour contracts that fit in with market conditions, rather than settle on SAS-wide contracts that tend to rise to the highest common denominator. As part of its Turnaround 2005 plan to return the carrier to profitability this year, SAS has been discussing wage cuts with staff. Around 30 of its 39 unions have agreed to new terms, but there has been resistance from some groups including pilots.
A benchmarking study conducted by SAS of its labour costs in all three countries recently found that in many cases it was paying some staff significantly more than its European competitors. SAS says that out of its target to save SKr14 billion ($1.7 billion) under Turnaround 2005, about SKr2 billion remains to be agreed. Most of this relates to outstanding contract negotiations with staff.
The intercontinental operations of SAS will continue to be conducted by the SAS Group.
Source: Airline Business