Feb 9, 2010, 12:04 GMT
Stockholm - The SAS Group, operator of Scandinavian Airlines, Tuesday reported a net loss of 2.9 billion kronor (393 million dollars) for 2009 - and said it would expand its cost-cutting plan and offer a new rights issue.
'The pattern is the same in the airline business, competition is extremely tough and it is very volatile,' SAS chief executive Mats Jansson told reporters.
The deficit, which comes on the heels of net loss for 2008 of 6.3 billion kronor, sent SAS shares plunging 15 per cent at noon on the stock exchanges in Copenhagen, Oslo and Stockholm.
Turnover fell from 52.8 billion kronor in 2008 to 44.9 billion kronor in 2009, while the SAS Group flew 24.9 million passengers during the year, down 14 per cent.
The cost-cutting plan, known as 'Core SAS', will be widened to make a further 2 billion kronor in savings to 7.3 billion kronor, the company said.
Although the plan, introduced last year, was carried out 'in line with or above expectations,' it was insufficient to compensate for the 'drop in demand and pressure on prices,' Jansson said.
SAS plans to reduce its workforce by 650, mainly in administration, in addition to some 3,000 jobs already impacted.
The rights issue of 5 billion kronor was backed by the governments of Norway, Sweden and Denmark, who own a 50-per-cent stake in the group, but hinged on approval from an extraordinary annual general meeting April 7 and a deal with unions to save 500 million kronor, SAS said.
Jansson said the deal with unions representing pilots and cabin crew was in the form of a 'letter of intent' which he regarded as 'morally binding.'
Sweden would pay roughly 1 billion kronor, in line with its 21.4 per cent stake in SAS, Enterprise Minister Maud Olofsson said.
Norway would pay 713 million kronor, provided SAS conducted cost savings, Norwegian Trade and Industry Minister Trond Giske said.
SAS has also reduced capacity, closing 45 routes and by the end of last year withdrawing 18 of the 21 aircraft it plans to take out of service.
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