Union Deal To Save SAS USD$182 Mln

Scandinavian airline SAS said on Wednesday it had struck a deal with unions which would yield annual savings of about SEK1.5 billion kronor (USD$182 million) and help it toward restoring profitability.
The loss-making airline said the new collective agreements for its employees included pay cuts for pilots and senior management, as well as adjustments in working hours, pensions and other expenses.
"The next few years may be highly demanding for the aviation industry, but with competitive costs and productive cooperation, we will survive this period," SAS chief executive Mats Jansson said in a statement.
State flag-carriers such as SAS have been struggling for years with overcapacity and competition from no-frills airlines and, while oil prices have eased in recent months, the fallout of the financial crisis has left the outlook far from rosy.
SAS has launched several cost cutting schemes to help it return to profitability while selling off businesses outside its core Scandinavian airline operations.
Last month, SAS said it had reached an initial deal to sell a majority stake in its loss-making Spanair unit and earlier on Wednesday, it announced the divestment of its stake in AeBal, which operates flights for Spanair, with a capital loss of about SEK200 million.
SAS said the new agreements reached with unions entailed a cost cut in relation to previous collective deals of about 12 percent, of which about one third was related to salaries and two thirds linked to items such as working hours.
The airline said the salaries for its pilots, chief executive and other members of the group's management would be cut by 6 percent.
"They still have to prove that it works and that the agreement for the working hours will materialise in reality," Nordea analyst Finn Bjarke Petersen said.
"I think we still have to remember that the cost gap is approximately SEK4 billion. This is only helping fractionally. There is still a long way to go."
SAS has estimated it has a cost gap of SEK4 billion compared to relevant benchmark carriers.
SAS, long tipped as a takeover candidate, said last year it was evaluating structural possibilities. In September, sources said that Germany's Lufthansa was in talks to buy it and this week French daily La Tribune reported that Air France KLM considered SAS as an "interesting" opportunity.
"I still see Lufthansa as the prime candidate to buy SAS. If they're really interested, SAS turns itself into a better takeover target by cutting costs," said Karsten Sloth, analyst at Jyske Bank