SAS Slashes 5,000 Jobs in Deepest Cut at a European Airline
SAS Slashes 5,000 Jobs in Most Drastic Cut at a European Airline
(Bloomberg) -- Scandinavia’s biggest network airline, SAS AB, is eliminating as many as 5,000 jobs, marking the first permanent staff cuts by a major European carrier in the face of collapsing travel demand.
The Stockholm-based company said Tuesday that the dismissals, amounting to 40% of the workforce, are necessary because employees have an average notice period of six months and it needs to prepare for what may be years of sluggish demand.
The job cuts provide a taste of things to come at European airlines, which have suffered one of the biggest hits from the coronavirus pandemic, with 90% of capacity grounded. Government furlough programs have generally avoided firings in the short-term, with thousands of workers laid off temporarily.
“It’s a painful message to give,” SAS Chief Executive Officer Rickard Gustafson said in a phone interview. “We are prepared to shift if demand returns more quickly and pull back some of the announced cuts.”
Shares of SAS traded 3.8% lower as of 12:42 p.m. in Stockholm, and are down 43% this year.
SAS rival Norwegian Air Shuttle ASA said last week it had placed pilot and cabin-crew companies in Denmark and Sweden into bankruptcy protection, saying it was unable to pay salaries with its fleet grounded. The move will affect about 1,500 pilots and more than 3,000 cabin crew at the carrier, which said Tuesday it has revised a debt plan presented only yesterday.
Furlough programs have affected tens of thousands of airline employees across Europe, with British Airways alone sending home 30,000 employees after grounding almost all of its passenger planes.
Loans Wait
SAS, which had already laid off 90% of employees, will split the permanent job cuts across its three home nations, with about 1,900 posts going in Sweden, 1,700 in Denmark and 1,300 in Norway.
Labor law in Nordic countries means notice periods are often longer than elsewhere in Europe. British firms legally have to give no more than 12 weeks’ notice, around half the period SAS said applies to its employees on average.
Gustafson said the airline has yet to receive money from a bailout announced last month under which it will get 3 billion kronor ($300 million) in loan guarantees from Sweden and Denmark and $146 million from Norway.
The European Union gave the go ahead for the payments Friday, he said, and SAS is now “working intensively to gain access to these facilities.” Among other carriers, Air France-KLM and Deutsche Lufthansa AG are working to pin down state support, with the German carrier preparing to cede a stake to the government as part of a multi-billion-euro package.
Norwegian Air’s revised debt plan will see about $300 million of its bonds converted to equity, instead of $350 million previously, in a bid to appease disgruntled holders.
The low-cost carrier is scrambling to qualify for a 3 billion kroner ($286 million) state aid package before running out of cash. Bondholders will vote on the proposal on Thursday, and shareholders on Monday.
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