Scandinavian Airlines (SAS) senior management is warning of second- quarter job cuts after its failure to agree labour deals left a SKr1.5 billion ($203 million) shortfall in cost-cutting plans.

The tri-national carrier's Turnaround 2005 plan calls for SKr14 billion in savings by next year, but restructuring so far has only identified Skr12.5 billion. The SAS Group has negotiated pay deals with most employees, but unions representing groups including ground staff and cabin crew are holding out.

Cabin crew in Denmark and Sweden have so far refused to sign up to the new restructuring deal and their failure to do so is pushing pilots unions in all three SAS countries to renegotiate their deals. SAS says it is very close to reaching agreements with all groups, but warns that one group holding out could derail the entire plan. The airline says: "Everyone must be on board for this plan."

The group's results will be presented at an extraordinary general meeting scheduled for 23 March. If management has failed to close the SKr1.5 billion gap, the airline will move to contingency plans, now under development, which could involve further outsourcing, more job cuts and closure of unprofitable routes. However, no routes will be axed if the Turnaround 2005 plan is successful, despite earlier suggestions that SAS was losing the battle on some long-haul routes (Flight International, 27 May-2 June 2003).

As chief operating officer Sören Belin suggested earlier this year, SAS Norway will be merged with the Braathens subsidiary to form SAS Braathens. There will be job cuts, but only in administrative roles; no aircraft or routes will be withdrawn, SAS says. The two airlines should be operating as a single unit by May, assuming that employees of both agree to new terms of employment - but "it is premature to comment on how the new contracts will look", says SAS.


Source: Flight International