Airplane Watching: January 2009

'Horrifying' year for SAS ends with losses, layoffs
AFP - Wednesday, February 4STOCKHOLM (AFP) - - Beleaguered Scandinavian carrier SAS, which slumped into the red for 2008, said Tuesday it would step up restructuring, lay off thousands, sell subsidiaries and cut 40 percent of its routes.

STOCKHOLM (AFP) - - Beleaguered Scandinavian carrier SAS, which slumped into the red for 2008, said Tuesday it would step up restructuring, lay off thousands, sell subsidiaries and cut 40 percent of its routes.

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The airline reported a net loss of 6.32 billion kronor (590 million euros, 760 million dollars) in 2008, after a profit of 636 million kronor in 2007 and a loss of 2.77 billion kronor in the fourth quarter.

The news sent the share price crashing down almost 17 percent to 35.80 kronor on the Stockholm stock exchange.

"Horrifying," said chief executive Mats Jansson of the company's losses at a press conference.

"2008 will probably go down in history as one of the most challenging and turbulent years that the entire aviation industry has ever experienced," he said earlier in a press release.

Already weakened in 2007 by technical problems which led to the grounding of its short-haul Dash-Q400 planes, SAS in 2008 faced plummeting demand due to the global economic downturn and a deadly crash in Madrid.

A plane operated by Spanair, an SAS unit, crashed in August in the Spanish capital, killing 154 people.

Out of SAS' 6.32-billion-kronor loss last year, 4.89 billion was attributable to Spanair which the Scandinavian company finally sold to a consortium of Spanish investors last week for a single euro.

To overcome its dire financial difficulties, SAS said Tuesday it would launch a new restructuring programme involving a share issue to raise 6.0 billion kronor and a fresh 14-plane reduction in its fleet.

An additional 3,000 employees would also be laid off while a further 5,600 workers would be taken off its books through outsourcing.

The restructuring programme has already received the thumbs-up from the Swedish, Danish and Norwegian governments, which together control 50 percent of the airline, as well as from its major private shareholders.

The carrier at the end of 2008 employed 24,635 people, having announced the lay-off of 2,500 workers in August. It had also cut back on its fleet by 33 aircraft, 15 of which belonged to Spanair.

Some 40 percent of the company's routes will be cut and a number of subsidiaries, including British Midlands, Estonian Air, Air Greenland and Skyways airlines, will be sold, SAS said.

Jansson, who has headed the company since January 2007, said the plan unveiled Tuesday would help streamline operations and save 4.0 billion kronor between 2009 and 2011.

The programme, he said, "will lead to SAS becoming a more focused and less complex company.

"SAS's market position remains strong. Our brand stands for quality, reliability and stability," he said, stressing that "in light of the fundamental crisis that is going on around the world, the losses remain at a manageable level."

Jansson also said the airline aimed to refocus its business on the Nordic market, which he said remained fairly healthy and showed potential for growth.

Swedish Industry Minister Maud Olofsson hailed the plan and said she had faith in SAS' management. Despite the dire news, she said she did not believe the company was on the verge of bankruptcy.

"I wouldn't say that. But there is a lot of competition in the airline industry and each company needs to run a very efficient operation to be profitable," she told news agency TT.

Unions representing both SAS's cabin crew and pilots said meanwhile they supported management's restructuring plan.

"We think it's good, it's a return to the old SAS and a smaller company that hopefully can be competitive," a union representative for SAS cabin crew, Pelle Gustafsson, told TT.

SAS, established in 1946 and today comprising SAS Denmark, SAS Norway and SAS Sweden, as well as low-cost airlines Blue 1 and Wideroe, has a 40 percent share of the northern European civil aviation market.

Germany's leading airline Lufthansa has long been mentioned as a rescuer for the Scandinavian company, which carried more than 29 million passengers last year, not including Spanair.

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