November 11, 2012 / 1:12 PM / in 8 years

Banks give nod to turnaround plan from airline SAS

Technicians work on the wing of a Scandinavian airline SAS Boeing 737 aircraft at the Stockholm-Arlanda airport in Sweden May 3, 2012. REUTERS/Johan Nilsson/Scanpix

COPENHAGEN (Reuters) - Scandinavian airline SAS (SAS.ST) will on Monday announce a cost cutting plan, approved by its lenders, containing over 1,000 staff reductions and pay cuts, Denmark’s TV2 said on Sunday.

The airline, in which Denmark, Norway and Sweden own a combined 50 percent stake, has been in talks with banks on securing financing to roll over debt coming due next year.

On Thursday, it postponed its third-quarter results, saying it was delaying publication until negotiations on efforts to ensure its survival had been finalized.

It has however already published preliminary figures showing it made a pretax profit of 568 million crowns in the third quarter.

But the airline has not made a full-year profit since 2007 and has said its turnaround plan is expected to yield approximately 3 billion Swedish crowns ($445.39 million) in earnings before tax. It also aims to sell assets totaling around 3 billion crowns.

A source told Reuters last week SAS is looking to sell its Ground Handling unit. Media have also reported the airline’s frequent flyer scheme, Eurobonus, is up for sale.

The cost cutting plan to be announced on Monday would see over 1,000 job cuts and pay cuts of 15 percent, TV2 said.

SAS in Denmark declined to comment on the report, and the union was not available for comment.

The European Commission has had informal contact with Scandinavian governments in recent days about airline SAS (SAS.ST), but has not received any request to permit state aid for the carrier, a Commission spokesman said on Friday.

Reporting by Mette Fraende; Editing by Elaine Hardcastle

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