Scandinavian Airlines System (SAS) has announced plans to reduce annual costs by SEK3 billion and to sell off assets for an equal amount.

"This truly is our 'final call' if there is to be a SAS in the future,” SAS President and CEO Rickard Gustafson says.

According to the savings plan, SAS plans to cut 6,000 employees off its staff base, reducing the number of employees from 15,000 to 9,000. In 2004, SAS had 32,500 employees.

Cutbacks will include some 800 administrative positions in Norway, Denmark and Sweden, considerably reducing the number of managers in the company.

A new salary system is to be introduced, with fewer steps on the salary scale, and with the basic wage to be cut by up to 15 per cent.

The plan is to be introduced immediately and will be concluded during 2013 and 2014.

“A new comprehensive plan will pave the way for a new, strong and competitive SAS. The plan needs to be fully implemented and new collective agreements must be signed in a very short space of time in order for SAS to have access to necessary funding,” SAS says.

“This plan will give SAS a fresh start and will create a completely new platform for the future. It is a profound plan that demands a lot from the entire organisation,” SAS says, adding that the plan needs to be implemented to allow the company to adapt to current market conditions.

SAS says that its banks and main shareholders have given the new plan their full support and will make credit available to SAS on equal terms.

Banks, however, demanded last week that an extension of facilities to SAS was contingent on guarantees from Sweden, Denmark and Norway who own 50 per cent of SAS. These governments in turn appear now to have cleared their guarantees with the European Union.

The SAS plan calls for new union agreements for personnel , a centralisation of administration functions, a reduction of compensation to market levels, new pension terms and an outsourcing of call centres and ground handling.

It calls for the divestment of subsidiary Norwegian regional airline Widerøe, airport related real estate interests and ground handling.

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