Airline SAS has no room for negotiation on cuts - CEO

COPENHAGEN/OSLO Tue Nov 13, 2012 12:36pm EST

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COPENHAGEN/OSLO Nov 13 (Reuters) - Crisis-hit Scandinavian airline SAS has no room to cut a deal with unions to ease the pain of pay cuts and job losses as it fights for survival, its chief executive said on Tuesday.

SAS, which has not made a full-year profit since 2007, unveiled a do-or-die plan this week, which unions must approve for it to receive loans from Norway, Denmark, Sweden and the company's other lenders.

"We have made a plan that we need to implement in full to get the required backing from our principal shareholders and our banks," CEO Rickard Gustafson told Danish TV2.

"Of course that comes across as quite definitive, but we have very little room for negotiation."

SAS, in which Sweden, Norway and Denmark hold a combined 50 percent stake, plans to shed 6,000 jobs through centralising administration and selling some operations, hoping to reduce costs to a level where it can compete with rivals such as Norwegian Air Shuttle.

The more than 30 unions that represent SAS's employees have been given until Sunday to sign up to the programme, which aims to boost results by 6 billion Swedish crowns ($885 million).

SAS won't be able to keep flying without the loans and its other major shareholders have ruled out injecting new cash.

"We feel this suggested plan is an ultimatum more than anything else," said Jan Levi Skogvang, leader of Norwegian union Parat, adding that the union's members appear to understand the situation faced by the airline. Parat represents about 1,200 SAS staff.

A spokesman for the Danish cabin staff union CAU, which represents 1,400 staff in Copehagen, declined to comment on whether the union would recommend the plan.

As part of the plan SAS aims to sell its profit-making Norwegian operation Wideroe. A group of Wideroe employees, represented by pilot Ola Giaever, confirmed that they are working on a possible buyout.

SAS is only one of a number of airlines forced to cut costs in the face of high fuel prices and competition from budget carriers.

International Airlines Group last week announced that its Spanish carrier Iberia would shed almost a quarter of its workforce and Deutsche Lufthansa is also in the midst of a "painful" cost-cutting drive.

SAS's survival plan, however, has been greeted with scepticism in the Nordic region, where governments have pumped billions of taxpayer crowns into the company through two rights issues in four years.

Swedish business daily Dagens Industri said SAS might not survive, even if unions swallow the bitter pill of lower salaries, less generous pensions and asset sales.

"The basic problem is that ... SAS has been unable to adapt to a deregulated airline market, but it has been made worse by weak leadership from its owners, strategic about turns and incapacitating politics."

Norwegian business daily NA24 was also gloomy. "It is more than doubtful whether these measures are sufficient to ensure the future of SAS," the paper said.

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