On 10 April 2003, Jörgen Lindegaard, the chief executive of Scandinavian Airlines System (SAS), presented a new cost savings programme, aimed at ensuring the airline's profitability and long-term competitiveness, as part of a major restructuring process which is already underway. The company aims to save a further SEK 6 billion to EUR 8 billion through various measures, such as freezing pay in 2003, increasing pilots' working time and, above all, cutting a further 4,000 jobs throughout Scandinavia. The majority of the workers affected by the job losses are pilots, cabin staff, ground staff and technicians, and employees in SAS Airlines administration. According to SAS, 35 out of 39 local trade unions represented at SAS in Denmark, Norway and Sweden have already concluded preliminary agreements on the restructuring programme.
In April 2003, the Scandinavian airline, SAS, announced that 4,000 jobs will be cut under a continuing restructuring programme, in order to achieve further cost savings of SEK 8 billion. Furthermore, the company stated that 35 out of 39 local trade unions represented at SAS in Denmark, Norway and Sweden have concluded preliminary agreements on the restructuring, with almost all of them accepting a pay freeze in 2003.
On 10 April 2003, Jörgen Lindegaard, the chief executive of Scandinavian Airlines System (SAS), presented a new cost savings programme, aimed at ensuring the airline's profitability and long-term competitiveness, as part of a major restructuring process which is already underway. The company aims to save a further SEK 6 billion to EUR 8 billion through various measures, such as freezing pay in 2003, increasing pilots' working time and, above all, cutting a further 4,000 jobs throughout Scandinavia. The majority of the workers affected by the job losses are pilots, cabin staff, ground staff and technicians, and employees in SAS Airlines administration. According to SAS, 35 out of 39 local trade unions represented at SAS in Denmark, Norway and Sweden have already concluded preliminary agreements on the restructuring programme.
It has been agreed that SAS pilots will work longer hours and receive salaries which are lower in practice. The pilots will see their effective pay cut by 2.5% at the same time as their working hours are increased from 10.3 hours per day to a maximum of 14 hours, depending on the number of landings. Their weekly working time will increase from 42 to 45 hours. The pilots will see their leave cut by six days a year. Management also wants to increase the number of hours in the air - 'block hours'- from the current level of 490 to 750 per year. The pilots' trade unions have agreed to decrease the staffing on flights to the USA, from three to two pilots. The pilots are one of the best paid professional groups, and in Sweden they earn between SEK 60,000 and EUR 70,000 per month. This, according to commentators, may be one reason why, although pilots are usually a group willing to fight to protect their interests, they have been willing to agree the changes at a time of crisis for SAS.
The trade unions for cabin staff at SAS Denmark have not yet reached agreement with management. Danish cabin crew have agreed to an increase in annual time in the air from 535 to 750 hours, longer working days and a wage freeze, but the unions have sought as compensation a commitment that the cabin staff's work tasks should not be taken over by other SAS companies. Management, however, has refused to accept this demand.
Agreements for Norwegian cabin staff are also a stumbling block. The relevant Norwegian trade union demands that the current national division between cabin staff during long passenger flights should be unchanged. The current division, the so-called 'Scandinavian principle', means that there are three Swedes, two Danes and two Norwegians on each plane. SAS management wants to abolish this rule and the Danish cabin staff trade unions support such a change, hoping to have more Danish staff on board, as many long-haul flights start in Copenhagen. This situation may turn out to be a future problem for the unions, as the Norwegian and Swedish cabin staff are anxious not to lose further jobs.
Swedish cabin staff have stated that they are willing to save hotel costs and other expense allowances and start work on the same day as the flying day, where possible, and have agreed to a pay freeze. Ground staff have also agreed to a pay freeze, if reluctantly.
SAS, 50% state-owned by Denmark, Noway and Sweden, has for some time been facing a deep financial crisis, like many aviation companies (DK0201124N andNO0206106F). It now has to adapt to new economic realities, notably new low-cost airlines. In total, SAS plans to save between SEK 18 billion and SEK 20 billion, and had already announced savings of around SEK 12.8 billion. The measures announced in April 2003 will bring a further SEK 6 billion to EUR 8 billion. Overall, 8,000 jobs will be lost through the restructuring programme - the 4,000 redundancies announced in April will be added to 4,000 decided earlier. The first redundancy notices will be issued in August 2003 and all the job cuts will be carried out by the end of 2004. Some 20,000 employees in all three Scandinavian countries will be affected in some way by the various restructuring measures.
Eurofound recommends citing this publication in the following way.
Eurofound (2003), SAS announces 4,000 redundancies and freezes pay, article.
