Airline SAS, seeking to survive, reaches deals with most unions


Scandinavian airline SAS reached agreements with most unions on wage cuts and pensions on Monday, and was pushing hard in talks with two remaining labor groups as it sought to ensure the group's survival.

The airline, hit by competition from lower-price rivals, last week announced plans to cut some salaries by up to 17 percent, lower overall headcount to about 9,000 from 15,000 and reduce costs.

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The airline had said a deal with unions, which also includes changes to work hours, must be reached by Sunday but talks carried over into Monday with a grueling all night session.

Agreements were reached with unions representing pilots from Norway, Denmark and Sweden plus unions for cabin staff in Sweden and a smaller cabin staff group from Norway.

But talks were still going on with the main cabin staff unions from Norway and Denmark.

"It is very, very positive (progress so far), but we are still missing two of them. First when we have everything in place can we go further," said SAS spokeswoman Elisabeth Manzi.

Analysts have questioned whether the measures will secure the independence of the airline in the long term as its structure was designed more to secure jobs and Nordic solidarity than generate profits.

It has struggled to compete with discount carriers like Ryanair and regional rival Norwegian Air Shuttle . SAS management has said that if the cost cuts are carried out, the airline has a sound base for the future.

Amid fears aired widely in Scandinavian media that lack of a deal might lead to an immediate bankruptcy application, Manzi said the airline had told crews to ensure airplanes were fully fuelled so as to be able to return home if necessary.

The airline was also giving cash to flying staff to ensure they could get access to hotels if there was a bankruptcy.

However, she declined to say how long SAS's cash would last if loans with the banks were not agreed to.

The governments and six banks have said they will lend SAS about 3.5 billion Swedish crowns ($515 million) if the airline can secure a deal with the unions to slash costs.

SAS expects cost cuts to improve earnings by 3 billion crowns while asset sales would strengthen the company's balance sheet another by 3 billion crowns.

($1=6.8020 Swedish crowns)

(Reporting by Johan Ahlander and Anna Ringstrom, writing by Patrick Lannin and Anna Ringstrom; Editing by Gary Crosse, Chris Gallagher and Edwina Gibbs)