SAS said it had struck a deal with pilots and cabin crew to freeze salaries and reduce pensions and allowances under a cost-cutting plan to return the Scandinavian airline to profit.
SAS, half-owned by Sweden, Norway and Denmark, said Friday the new collective agreement would bring over SEK500 million kronor (USD$70 million) in savings.
Last year was one of the worst ever for the aviation industry, but SAS has long been struggling with high costs. Unions have up to now resisted changes needed to compete with no-frills flyers such as Ryanair.
The airline said cost cuts from all unions for 2009 and 2010 now totaled SEK2.1 billion. Overall savings under the Core SAS restructuring plan were SEK7.8 billion, it said.
"We have made a new collective agreement that gives a lot of benefits to the company," Danish Cabin Attendants Union chairman Verner Jensen said.
Lars Heindorf, analyst at ABG Sundal Collier said the deal and the projected savings had been widely expected as it was one of the demands key shareholders made in order to support a planned SEK5 billion cash call by the airline.
"There would have been no rights issue if they hadn't done a deal," he said.
HARD LANDING
SAS made a pretax loss of SEK3.4 billion in 2009 after losing SEK1.0 billion the year before and has been forced to turn to shareholders for more cash to keep flying and complete its latest restructuring plans.
The new issue will be the second by SAS in just over 12 months.
CEO Mats Jansson said in a recent newspaper interview that the company would probably be sold to a rival when it has completed its turnaround plans.
German carrier Lufthansa and Air France-KLM have both been linked with the Scandinavian airline.
In February, Sweden's government sought parliamentary permission to sell down its 21.4 percent stake in the airline, though it said such a move was a long way off. Norway and Denmark said they were also open to reducing their stakes.
SAS has said 2010 will be another tough year and Jansson doesn't expect the airline to return to profit before 2011.
