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SAS: time for change

17 Feb 2012 by ScottCarey7

It may be Europe’s most punctual airline but SAS has a period of tough cost cutting ahead if it is to hold off an aggressive competitor. 

SAS has begun negotiations with the relevant unions in order to discuss plans to cut over 1 billion Swedish kronor from its cost base and around 300 jobs over the next two years.

Speaking to Business Traveller in the SAS Business lounge at Copenhagen airport, CEO Rickard Gustafson said that the unions have responded positively to the proposed cost cutting measures, which will include salary and pension cuts as well as increased productivity, and have shown “a strong dedication and commitment to the company.”

The job cuts will occur primarily in administrative areas such as HR, sales and finance as Gustafson looks to centralise the company and pull in the disparate administrative threads which are currently strewn across Oslo, Copenhagen and Stockholm. “We’re going to be very aggressive in taking out costs in the back end such as admin and union agreements,” says Gustafson.

SAS has had a weak start to 2012, reporting its fourth consecutive full year net-loss and is facing increased competition from fellow Scandinavian carrier Norwegian Air Shuttle. Norwegian recently filed a record breaking order with Boeing for 100 B737 Max aircraft and 22 next-generation B737-800 aircraft as well as six 787 Dreamliners as it looks to aggressively increase its network (see online news January 25).

SAS also had to write off €149 million of debt owed by Spanair when the carrier ceased operations earlier this month (see online news January 27) due to SAS holding an 11 per cent stake in the airline.

SAS has recently reopened its Copenhagen to Shanghai route (see online news February 1) in an attempt to improve its position in Asia. Gustafson believes that this is an area of great potential growth for the carrier as it is currently heavily reliant on its short-haul traffic, which contributes 69 per cent of its total operations. This move follows a recent strengthening of code-share agreements with SIA which will, according to Gustafson, allow SAS to share some of the inherent risk associated with opening up new long-haul routes.

SAS CEO Rickard Gustafson receiving the carrier\\\\\\\\\\\\'s flightstats award for punctuality

CEO Rickard Gustafson receiving SAS's flightstats award for punctuality 

Moving away from the figures, Gustafson was keen to emphasise the carrier’s recent good punctuality record. SAS has been named Europe’s most punctual airline by flightstats.com for the third year running with an on-time percentage of 88.22 per cent. Gustafson stated that this award is “more than a PR stunt” but is something which “is embedded in our culture” and SAS as a company.

Gustafson closed proceedings by saying: “We fully recognise that in order to stay competitive we have to be cost competitive in those areas that the customer doesn’t value, such as our pension scheme for our pilots, but when it comes to what we do to provide value for customers [such as the ongoing roll out of onboard wifi], I honestly believe that if you are able to differentiate there you are able to differentiate your pricing.” Only time will tell.

For more information visit flysas.com.

Report by Scott Carey

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