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

I can't see it happening
 

I don't think that the scandinavian governments will let SAS go to the wall and leave the market to those with a red nose.

Haven't we heard the same about Belgian and Swiss governments a couple of years ago?

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.

Leaking from negotiations:

Governments give guarantees to banks for new loans
1.000 have to go
15% salary reduction flat

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...

Isn't the Expressen newspaper a tabloid known for being more interested in sensationalism than reality?

And look what happened to Spanair

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:E
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.

Do they still have a stake in Air Baltic?

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.........

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.

BBC News - Airline SAS to cut jobs and pay

Big numbers indeed !

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.

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.

Oh yes indeed! This cynical and non-corporate Brit was immensely proud to work for them.

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.

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."

:eek:

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.

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"...

I travelled with this outfit a number of times between LHR and CPH/OSL/ARN during the 1990s when I worked in the airlines.

The one memory I had was the C-Class meal, served without fail on EVERY flight. Boiled fish & new potatoes served in 1/2 inch of molten butter - EEEUUURGH!!! :eek:

The real deal
 

The real purpose of todays plan is union-busting in modern day scandinavia. Aside from the immidiate cost savings it will basically strip the unions of whatever power they still possess. And that will generate alot more money over the long term.

I am starting to feel like I work in a place where unions are not allowed.

I'm sure that the management has plenty to do with the continuing failure of SAS to be profitable, but I don't think that you can explain the current slashing (and it is slashing) entirely upon union-busting.

The financial performance of SAS means that irrdlevant of who is to blame, radical steps have to be taken to stop the company closing down in the very near future, and I think most companies would take the same measures, in aviation or other industries.

Stand by and save the company first, then talk about T&C's and pay. Sorry because that sounds very pro-management but I think it's true in this case. I wouldn't want to be made redundant in the current climate, there are plenty of guys without a drive and the queue is getting longer each week.

Having known several union reps in Scandinavia once upon a time in the past, I observed that their unions got ridiculously powerful during that era. I´m not anti union, far from it, but I do think that as they gain strength many unions get carried away with their power, and their ojectives, demands and expectations became unrealistic and eventually unsustainable. Unfortunately without unions the pendulum will swing completely the other way.

IMHO. If anyone remotely thinks SAS can compete fairly when labour cost in Denmark and Norway run 30-40% higher than Sweden and even more than the rest of Europe, you need to re-do your medical, with or without unions.

12% average pay cut just ain't doing it in the long run. Good luck

All bets on, SAS will do like the Swiss. Bankrupt the carrier, everyone gets the sack, restructure, rehire with 40% haircut. The model seemed to work for Swiss so it can't be that bad.

Sadly this is what happens when you run three hub nowadays, have diversified fleet, and have to pay taxes in three different countries with high labour costs... and trying to lower ticket costs to compete with low-costers.

That just doesn't work anymore.

Employees resisting SAS “ultimatum”
 

http://cphpost.dk/business/employees...as-“ultimatum”

"Danish employees showed their dissatisfaction with the plan today in Copenhagen, where members of the 1,400 member strong Cabin Attendants Union (CAU) refused to take part in a meeting with SAS managing director"

:ouch:

Not really surprised.

SAS tops European airline critical list - FT.com

:oh:

Sadly I fear SAS will ultimately fail. As the previous poster has shown the airline is struggling with the Danish pilots union this time but it has also struggled in good times with the competing demands of the various Nationalities involved Union and Government interests.

SAS have a good number of crew who remember the "Good old Days" of C class taking up 21 rows on an evening flight to Oslo from Heathrow. Those days are gone and sadly with it attitudes have to change to give any legacy carrier without a major International network a chance of surviving.

I agree with the complaint that SAS should have conducted initial talks in private but time to wake up and smell the coffee. SAS have 138 aircraft with 10 different makes/models not ideal. Norwegian air shuttle have 67 and 259 on order and moving into long haul.

Who would have thought this ten years ago......
 

Incredible comment by SAS. So Kjos is paid by performance i.e. low salary and if norwegian sees profit he gets paid dividend. No profit no dividend. That's how it should be. See Lee Iacocca of Chrysler. US$ 1 in salary and all performance based.

As the saying goes, as you make your bed..... and unfortunately it boiled down to stubborn unions to sink the airline.

No real news in that Reuters article - only a couple of facts that is outdated by let's say 6 months. Norwegian has now 68 Boeing 737s - 11x B733 and 57x B738. At the year end one more of B733 will be leaving the fleet, while this year's last B738 delivery isn't far away. The net growth next year will be 10x B738 + 3x B788 according to what is said in the Norwegian Q3-12 presentation.

SAS on the other hand seems to get in 3x around 12 year old B737, 1x factory new B738 and 3x A320 (2x 12 year old aircraft that flew for Spanair + 1x 6 year old) at the end of this year (provided they still stay afloat the coming Monday).

Ramrise,

A very interesting comment.

You do understand that SAS is just about bankrupt, don't you? If SAS go bankrupt then no one has a job; not a single person. The only ways of not going bankrupt are to borrow more money, if someone will lend the money, or to reduce costs. Borrowing money will not stop SAS going bankrupt, it will just delay the inevitable.

How would you stop SAS from going bankrupt?

Med vennlig hilsen,

Hval

One of the problems I have seen as SLF around SAS is they seem to have cut costs already in the wrong places...
They charge similar prices to LH / LX / BA on European routes but give the customers near Ryanair service...
I choose to fly short haul European flights out of Scandinavia on airlines that will at least give me a free snack and a drink. For the same price you get a little extra....

One day airlines might realise that looking after the customer might bring back more business.

Today I got an email from SAS offering me 15% corporate bonus credit points if I actually paid them in advance before buying tickets. Not sure if I want to use them as a bank in these shakey times. Sadly SAS may end up like Swedish SAAB automobiles - a slow and painful demise.

They believed their own BS
 

My experience goes back a few years, but SAS had a tendency to come up with marketing ideas they couldn't live up to:

The "Businessman's Airline", when their 767s had the worst longhaul BC seat.

The "Destination Services": one could fly from e.g. Trondheim to Bangkok via CPH and leave one's heavy winter coat in storage there.
Change of plan: return flight is now via Stockholm. I still wonder what they did with all those coats.

Toffeez.

No. Sorry, I don't accept this.

Long-haul was not SAS's strongest product, but Euroclass within Europe had a strong reputation, and much repeat business. I doubt if any other European airline had such a mix of C to Y traffic.

I speak from having been in sales and marketing for SAS for nine years, where I met frequent travellers, their travel managers, and their business travel agents. SAS had an enviable reputation. It wasn't all marketing, but solid, front-line substance. They could more than live up to what they claimed. They were number one in punctuality and won the coveted ATW Airline of the Year award a the end of the eighties.

They had an outstanding product and well-motivated staff. I was proud to work for them, and I'm not normally a "company man"

However, as someone said earlier in the thread, they've simply not moved with the times in respect of costs and product. It's not 1987 any more.

I don't know why there is so much surprise generated when yet another European national airline becomes insolvent. The business model of "lets buy some aircraft, operate some routes, pay ourselves lots of money then rely on the state to bail us out" has long expired.

Willie Walsh was saying several years ago that he only expected Lufthansa, KLM-AF and BA-IB to stay in existence long-term, plus a few of the bigger lo-co's. Seems like this is coming to pass: the economics of flag carriers operating out of small (population) countries has always been suspect.

No doubt, SAS has stayed in the past. My latest international flight with them was the first Saturday in October - from Frankfurt to Oslo. The Boeing 737-600 was filled to the rim and many passengers didn't get on board at all (heavily overbooked?). The best comparison from the past is an utterly chaotic overbooked late afternoon flight I had with United Shuttle from ORD to EWR in the 1990s. On board the United flight I did get both free drinks and a chicken dinner, but not the same on board the SAS flight. I did buy an expensive dried out turkey sandwich that didn't have any turkey on it and bottle of water. The free tea tasted like hot brown tap water.

Compared with the three other segments I had on this Star Alliance trip to Nice, SAS fell through compared with Lufthansa and Swiss. No doubt, my next trip to Nice will be with Swiss only; flying with them is a real joy.

Willie Walsh was saying several years ago that he only expected Lufthansa, KLM-AF and BA-IB to stay in existence long-term, plus a few of the bigger lo-co's. Seems like this is coming to pass: the economics of flag carriers operating out of small (population) countries has always been suspect.

Circa 1987, all SAS staff received a booklet from CEO Jan Carlson restating the core values of the airline and warning them of these very outcomes, namely a few mega-carrier amalgamations, and a drastic increase in competition. And the possible consequent demise of SAS.

The only way to avoid this was for the airline to buy into a carrier more centrally located in the continent to try and achieve hubbing benefits, and cut costs, neither of which have happened.

i had a brief look at the financial reports of some peer airlines and it's evident SAS will be in trouble even after this rescue package.

I give them 30% chance of longterm survival after this round of cuts.

The cost burden is to high and SAS needs a 35-40% cut in salaries (with associated social benefits) to be on an even playing field.

The unions can jump up and down as much as they wish, but this is reality.

Sad but true.

This is exactly what got us all (not just airliners) in the bad spot we are in. Short term profit. Works for while, then the big bang comes. A creative manager can always create profits from year to year, but a healthy company can´t be build without a long term strategy