SAS close to bankrupcy
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SAS close to bankruptcy
SAS close to bankruptcy. Long analysis in link, you need to googletranslate it yourself, it´s pretty long. Headline: "Everybody are tired of SAS".
Till slut har alla tröttnat på SAS | Nyheter | Expressen | Senaste nytt - Nyheter Sport Nöje TV
Till slut har alla tröttnat på SAS | Nyheter | Expressen | Senaste nytt - Nyheter Sport Nöje TV
Last edited by paparomeodelta; 11th Nov 2012 at 08:53. Reason: spelling
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This has nothing to do about "Red Nose" company.....but simply SAS running out of money and unable to make money in its current state....and when Governments (taxpayers) have to bail out the company by promise to pay Bank loans in case of bankruptcy it will not work.....They may have problems with EU with the issue of Government support....and likely have to cut a lot of jobs and change agreements with the unions.
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Analysis? A biased article in a Swedish tabloid, based more on affection rather than facts can hardly be called an analysis.
Most of what is written about the situation is based on what another Swedish paper, Dagens Industri, has published over the last couple of months. DI's reputation has the last couple of years gone down the drain and are referenced as the tabloid among Swedish business newspapers.
No doubt SAS has problems. The figures just doesn't add up these days.
Question is what can be done? Costsaving among staff is usually the first thing that management proposes, always with the same argument that "all other costs are equal to our competitors".
Given the annual reports from the biggest competitors in Scandinavia though, SAS cost structure would still be more than twice of Ryanair and 25% higher than Norwegian even if all of SAS 15,000 employees would be working for free. But of course, blame the staff...
Most of what is written about the situation is based on what another Swedish paper, Dagens Industri, has published over the last couple of months. DI's reputation has the last couple of years gone down the drain and are referenced as the tabloid among Swedish business newspapers.
No doubt SAS has problems. The figures just doesn't add up these days.
Question is what can be done? Costsaving among staff is usually the first thing that management proposes, always with the same argument that "all other costs are equal to our competitors".
Given the annual reports from the biggest competitors in Scandinavia though, SAS cost structure would still be more than twice of Ryanair and 25% higher than Norwegian even if all of SAS 15,000 employees would be working for free. But of course, blame the staff...
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15% cut will not be enough. A quick and dirty below.
All cost being the same across the industry. i.e. lease, fuel, interest, landing fees etc, the single highest cost is labour.
There is better data from SH&E or BCG, but this one is easy to read
Where your airfare really goes - Fortune on CNNMoney.com
Labour cost taken from eurostat (or European Commission).
Eurostat Home
Denmark is roughly 40% higher than Sweden and Norway is roughly 30% higher than Sweden.
Compare this to e.g. Poland, which has a highly qualified labour force, and has less than half of Sweden's labour cost. Even Germany has lower labour cost than Sweden.
So, comparatively, roughly 30% of your entire cost is halved in case of LOT, giving more room for fleet renewal and better fuel economy, better customer service (and satisfaction) and thereby can compete more effectively.
This very simple calculation should be easy enough to follow even for the unions.
All cost being the same across the industry. i.e. lease, fuel, interest, landing fees etc, the single highest cost is labour.
There is better data from SH&E or BCG, but this one is easy to read
Where your airfare really goes - Fortune on CNNMoney.com
Labour cost taken from eurostat (or European Commission).
Eurostat Home
Denmark is roughly 40% higher than Sweden and Norway is roughly 30% higher than Sweden.
Compare this to e.g. Poland, which has a highly qualified labour force, and has less than half of Sweden's labour cost. Even Germany has lower labour cost than Sweden.
So, comparatively, roughly 30% of your entire cost is halved in case of LOT, giving more room for fleet renewal and better fuel economy, better customer service (and satisfaction) and thereby can compete more effectively.
This very simple calculation should be easy enough to follow even for the unions.
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Over paid fools in management
One of the most basic "rules" for keeping costs down, is ONE TYPE! For years SAS was M-D based and the relationship to the factory regarding training, parts, maintenance etc were exemplary. The next generation of MD was killed by SAS' defection to the 737. It entailed a complete revamp of training philosophy, technical staff had to be retrained, all the pilots, even the emergency training of the FAs, parts, tools......hugely expensive.
Then they went and bought Airbus?...so now there are MD 80s and 90s, AB of at least three versions, CJs, Dash 8s, 737......
This matter alone would be enough to kill the company cost-wise. Of course, operating one type might not have covered every route and so one LR type might have been added, but this in such a small company?
Add to that the poor service level, confusion as to whether they will be a regional, international, feeder for LH, sell off of profitable units during earlier crisis times.......
....and that the director of this fiasco earns 8.8 million kr plus 2.2 million in pension, compared to say, Norwegian's director (note, a company that is making money!!!!) who gets 1 million and 233,000 in pension.......that this carries through to all the clowns (mis)managing the company, and you have an idea why they are in the situation they are!
If you read the history of the company, the types who started it and made it a success, then introduced BS psycho-testing which made certain that this type never got hired! Instead they got too many arrogant prima donnas. If you have time to run a farm or a consulting business alongside of your job, then you are not working enough hours.
So cut the salaries of the small fish......it will never be enough, because it is rotten at the top.
A shame, but in a healthy marketplace, the robust and flexible will survive, while the rigid and arrogant will die.....Sabena, Eastern, Swiss........Braniff, NW.........
Then they went and bought Airbus?...so now there are MD 80s and 90s, AB of at least three versions, CJs, Dash 8s, 737......
This matter alone would be enough to kill the company cost-wise. Of course, operating one type might not have covered every route and so one LR type might have been added, but this in such a small company?
Add to that the poor service level, confusion as to whether they will be a regional, international, feeder for LH, sell off of profitable units during earlier crisis times.......
....and that the director of this fiasco earns 8.8 million kr plus 2.2 million in pension, compared to say, Norwegian's director (note, a company that is making money!!!!) who gets 1 million and 233,000 in pension.......that this carries through to all the clowns (mis)managing the company, and you have an idea why they are in the situation they are!
If you read the history of the company, the types who started it and made it a success, then introduced BS psycho-testing which made certain that this type never got hired! Instead they got too many arrogant prima donnas. If you have time to run a farm or a consulting business alongside of your job, then you are not working enough hours.
So cut the salaries of the small fish......it will never be enough, because it is rotten at the top.
A shame, but in a healthy marketplace, the robust and flexible will survive, while the rigid and arrogant will die.....Sabena, Eastern, Swiss........Braniff, NW.........
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SAS has been close to death for years, more is the point they were part share in Estonian air until 2010,- another regional lame duck that has been bailed time and time again by the stupidity of the Estonian government, who are too proud to let it die. That must have sucked out a lot of spare cashflow for years.
SAS sells off Estonian Air shares
Market forces should be allowed to take their course, AND should be the same for all.
Air Baltic, SAS, EA all should be allowed to go bust, especially as AB don't respect any EU laws, and routinely rely on the Riga-LV government hand outs to keep their shambles that passes for a "budget" airline flying.
Had this happened already, I guess we wouldn't have had the miserable spectacle of Malev, (which was a good AL) the simply abusive dominance of the bucket jobs like Ryan or the messy Wizz taking over, when they simply abuse their way to the top through renamed subsidy.
It seems to me, in northern Europe it's mostly a race to the bottom with "customer service" and reliability placed last priority, with a total inability to work together and do strategic long term planning, rather than "the winner takes all".
High time for a good clean out before the triple dip recession forces them to the wall for good.
SAS sells off Estonian Air shares
Market forces should be allowed to take their course, AND should be the same for all.
Air Baltic, SAS, EA all should be allowed to go bust, especially as AB don't respect any EU laws, and routinely rely on the Riga-LV government hand outs to keep their shambles that passes for a "budget" airline flying.
Had this happened already, I guess we wouldn't have had the miserable spectacle of Malev, (which was a good AL) the simply abusive dominance of the bucket jobs like Ryan or the messy Wizz taking over, when they simply abuse their way to the top through renamed subsidy.
It seems to me, in northern Europe it's mostly a race to the bottom with "customer service" and reliability placed last priority, with a total inability to work together and do strategic long term planning, rather than "the winner takes all".
High time for a good clean out before the triple dip recession forces them to the wall for good.
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For ex-SAS people like me, this is a sad sign, but it's not 1985 any more, and as Jan Carlson identified way back then, geography, cost base and population will never be on their side, and the lo-co carriers have come to dominate like no-one would have ever predicted.
Actually, Carlson gave closure/take-over of SAS as one of the possible 21st century outcomes in the mid-eighties, unless costs and productivity issues were addressed. I hope it does not come to this.
Actually, Carlson gave closure/take-over of SAS as one of the possible 21st century outcomes in the mid-eighties, unless costs and productivity issues were addressed. I hope it does not come to this.
Last edited by Midland 331; 12th Nov 2012 at 12:58.
I read somewhere that SAS has to deal/fight/negotiate with 36 different trade unions!
I worked there briefly 25 years ago; a fantastic working place with a pride and esprit de corps among the employees which I have never seen since.
I worked there briefly 25 years ago; a fantastic working place with a pride and esprit de corps among the employees which I have never seen since.
>I worked there briefly 25 years ago; a fantastic working place with a pride and esprit de corps among the employees which I have never seen since.
Oh yes indeed! This cynical and non-corporate Brit was immensely proud to work for them.
Oh yes indeed! This cynical and non-corporate Brit was immensely proud to work for them.
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EDMJ
"I worked there briefly 25 years ago"
Was that before Jan Carlzon built his glass palace HQ? I used to go there often and was amazed at the culture. They had a well paid army who would evaluate new planes for months or years, only for it all to be overturned by a quick board decision. Hence the MD/737/Airbus fleet mess.
Plus the cabins seemed to be designed by the unions for the maximum comfort of the cabin crew.
It was obvious then and it still is now that the population of the 3 countries can't support 3 hubs, and deleting long haul from Oslo or Stockholm sends the pax via LHR or AMS, not CPH.
The writing has been on the wall for a very long time.
P.S. for an outsider, they were good honest friendly people to work with. Including their Norwegian jokes. Apparently the Scots are not so tight after all.
Was that before Jan Carlzon built his glass palace HQ? I used to go there often and was amazed at the culture. They had a well paid army who would evaluate new planes for months or years, only for it all to be overturned by a quick board decision. Hence the MD/737/Airbus fleet mess.
Plus the cabins seemed to be designed by the unions for the maximum comfort of the cabin crew.
It was obvious then and it still is now that the population of the 3 countries can't support 3 hubs, and deleting long haul from Oslo or Stockholm sends the pax via LHR or AMS, not CPH.
The writing has been on the wall for a very long time.
P.S. for an outsider, they were good honest friendly people to work with. Including their Norwegian jokes. Apparently the Scots are not so tight after all.
Last edited by toffeez; 12th Nov 2012 at 14:00.
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More indepth.......
SAS to cut jobs and sell assets in survival plan | Reuters
"Gustafson said the company needed to get the deal with unions in place in a week."
"Staff will take pay cuts of up to 17 percent, depending on what part of the organization they work in. Cabin staff will see their pay reduced on average by 12 percent."
"Gustafson said the company needed to get the deal with unions in place in a week."
"Staff will take pay cuts of up to 17 percent, depending on what part of the organization they work in. Cabin staff will see their pay reduced on average by 12 percent."
Toffeez
I did nine years there, never got to STO HO, but attended many courses at the smaller version of the palace you describe, in CPH.
Yes, the style was indeed lavish, but at the time, circa 1986, SAS were the third most profitable airline in the world after AA, plus one other (SQ?), yet were around number twenty two in rank of number of passengers carried, if my memory serves me right. One of their highest yield routes was LHR-ARN, which was around £530 return C-class, and it had some of the highest load factors of the whole network. So they had the money to pay generous per diems, and furnish their offices in solid pine. In fact, I'm sitting at one of their solid pine desks right now. I hope they don't want it back.
When Midland wet-leased a DC9-21 for MME-LHR circa 1994, the cabin crew were astonished that Midland could serve drinks, a hot meal, and hot towels on such a short sector. And it always amused me to baord one of the MD80s and find that the space for the first three rows of seats (at least) was taken up by a huge galley.
And the London town office. Staffed by around 100. I never did figure out what some of the middle-ranking managers actually did. Mr O'Leary would have laughed like a drain.
Yes, the style was indeed lavish, but at the time, circa 1986, SAS were the third most profitable airline in the world after AA, plus one other (SQ?), yet were around number twenty two in rank of number of passengers carried, if my memory serves me right. One of their highest yield routes was LHR-ARN, which was around £530 return C-class, and it had some of the highest load factors of the whole network. So they had the money to pay generous per diems, and furnish their offices in solid pine. In fact, I'm sitting at one of their solid pine desks right now. I hope they don't want it back.
When Midland wet-leased a DC9-21 for MME-LHR circa 1994, the cabin crew were astonished that Midland could serve drinks, a hot meal, and hot towels on such a short sector. And it always amused me to baord one of the MD80s and find that the space for the first three rows of seats (at least) was taken up by a huge galley.
And the London town office. Staffed by around 100. I never did figure out what some of the middle-ranking managers actually did. Mr O'Leary would have laughed like a drain.
Last edited by Midland 331; 12th Nov 2012 at 16:10.
short flights long nights
I have flown LHR ARN with SAS in J about 20 times. The seat is great..but the service leaves a lot to be desired....I mean for what i payed if i ask for anoher glass of wine, it cant be that hard,without the "look"...