SAS plan articulated

Struggling Scandinavian Airlines (OMX: SAS) revealed detailed of its much speculated crisis plan or 4Excellence Next Generation (4XNG) that comes on top of ongoing 4Excellence today together with Q3 interim numbers. The text is strikingly direct and drives a hard bargain toward unions, giving the first of those until Sunday to take the deal. President & CEO Rickard Gustafsson said this is the final call for the entire company if SAS is to continue to exist, requiring fast agreement with relevant labour groups. This should allow 3 billion SEK in annual savings and asset sales of a similar magnitude.

Restructuring should allow an agreement on a new 3.5 billion revolving credit facility to be reached while at the same time lessening the reliance on external lenders. In addition to new union agreements calling for wage cuts, administration functions will be streamlined, compensation plans reduced and pension terms revised. Call centres and ground handling will be outsourced. All in all these measures if implemented should abolish the need to issue new equity. To bring home his point, Gustafsson was first in line to take a 20% pay-cut. Employees are expected to take a cut of up to 15% of their wage.