SAS, the airline half-owned by the governments of Sweden, Norway and Denmark, has indicated they will cut 6,000 jobs, sell off assets and renegotiate contracts with the remaining staff in an effort to reach profitability. The plan includes selling off regional carrier Wideroe, the ground handling services arm of the organization and other assets. SAS’s CEO noted that the current efforts are the last chance the carrier has to survive, "This truly is our final call if there is to be an SAS in the future."
Faced with heavy competition on both regional and long-haul routes, SAS has not made a profit in several years. Creditors are beginning to push the issue more aggressively and the company seems inclined to act on the demands. The latest salvo on the competition front come from Norwegian Air Shuttle, the LCC with new 787s on the way to serve the New York City and Bangkok markets. As part of their low cost efforts Norwegian will be setting their long-haul crew base in Bangkok to take advantage of lower costs there. Options like that are not available to SAS for controlling costs at this point.
SAS needs some good news, and soon. Hopefully this latest round of cuts will be sufficient to bring the company through the troubles.
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How can Norwegian be a “low cost” option? Do you have any idea what the salary costs are in Norway.
Yes, I do. So does Norwegian. That’s why they’re basing the long-haul crew in Bangkok.
Their CASM numbers are much lower than those of SAS. Much smaller pension obligation and lower salaries are a big part of it.
@Zz – not to mention the tax. Keep in mind that not only do Scandinavian works pay a HUGE tax, but the company’s pay a HUEG tax per worker on TOP of that as well. I love Scandinavia and visit often but would never run a business from there!
I have direct reports in norway, UK, France, and the US. The real bottom line difference in cost for the Norse worker to my company is about 8% more fully loaded with benefits. The Norse worker pays a high VAT, but pays very little property tax, pays into maternity/paternity leave (which is very generous), pays into a vacation fund (all workers are given a min of 5 Max of 6 weeks/year, and a state pension. My back of the envelope math comes to about 12% more than the equivilent US worker. But they get some very good benefits for that extra $$.
All those “benefits” and high salaries are no longer affordable in a competitive environment. SAS will not survive without a government bailout and it won’t be the last one to run into this scenario either.
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