SAS restructuring on track

Scandinavian airline SAS, the flag carrier of Sweden, Denmark and Norway facing stiff competition from low-cost rivals such as Ryanair, said Wednesday it had reached agreements with cabin crew and pilot unions, clearing the last hurdle to a group restructuring.

Scandinavian airline SAS, the flag carrier of Sweden, Denmark and Norway facing stiff competition from low-cost rivals such as Ryanair, said Wednesday it had reached agreements with cabin crew and pilot unions, clearing the last hurdle to a group restructuring.

"It is very important for us that an agreement has been reached with the various labor unions. We can therefore proceed with establishing new, independent companies in the Scandinavian countries. The cost-cutting program has given us strengthened competitive ability in each of the three markets," SAS information director Simen Revold told Norwegian news agency NTB.

Norwegian cabin crew quickly agreed to make sweeping sacrifices to meet cost-cutting targets but talks with crews in Denmark and Sweden, plus negotiations with pilots, went over original deadlines.

The new union contracts would yield "a positive effect of about SEK 1.5 billion (USD 200 million), with full effect in 2005. The effect during the current year is estimated at SEK 800 million" (USD 107 million), Reuters reported.

The company set a goal of SEK 14 billion (USD 1.87 billion) to be saved in 2005. SAS has also vowed to return to profit this year after its record SEK 2.2 billion (USD 293.2 million) loss before capital gains and non-recurring items in 2003.

Shares in Scandinavian airline SAS shot up by almost 12 percent on Wednesday after the company said its plan to restore profitability after three years of losses was now on track.

In Norway a new company will be formed by merging SAS Norway with fully-owned subsidiary Braathens. The new company is expected to require the same level of staffing that the two services use today.

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