In an attempt to shore up cash, Scandinavian Airline Systems is to dispose most of its Wideroe unit.

80% of the shares are to be sold to a group of investors, with an option to sell the final 20% of Wideroe in 2016.

For SAS it’s the best of both worlds – it gets the cash from the sale, whilst maintaining links with Wideroe to provide regional services. The sale is valued at SEK 2.0 billion – Approx US$305 million, to SEK 2.3 billion (US$307 million) after divestment.

The sale will include 7 Bombardier Dash-8 Q400 turboprop aircraft – which Wideroe currently leases from SAS Group. SAS will also dispose of three extra aircraft to a aviation lessor who in turn will lease them to Wideroe.

Wineroe operates a fleet based on the Bombardier Dash-8 fleet, split between:

• Bombardier Dash8-100
• Bombardier Dash8-Q200
• Bombardier Dash8-300
• Bombardier Dash8-Q400NG

Rickard Gustafsson – SAS Group President seems happy with the sale stating

“We are pleased to have developed Wideroe into a successful airline under SAS’ ownership and we look forward to continue strengthening Wideroe’s position as the leading regional airline in Norway together with the new owners”

Subject to commercial clearances, the sale should be completed in September 2013.

For SAS – it’s a needed lump of cash as it struggles for its long term survival. Last year it suffered major strikes which almost brought the airline to its knees.

Hopefully SAS can continue to grow from this position – however the situation is precarious as SAS is being eaten at the bottom by Norwegian Air Shuttle and Ryanair – and at the top by Emirates and Qatar who eat into the Far East traffic.

It seems that the final union that was holding out – the Danish Flight Attendants Union – has agreed to the savings plan which requires job cuts, longer hours and changes in operations to allow SAS to get extra funding.

SAS have a long way to go even after they’ve secured extra money from creditors, with the sale of lots of bits of SAS:

• Aircraft engines
• Property
• Widereo  (an airline in the SAS group)
• Its ground handling division
• Outsourcing where possible

Is it enough for SAS to stay alive or will there be further drastic action needed? SAS is being eaten from the bottom with Ryanair competing in the ultra-low cost segment, and Norwegian Air Shuttle eating from the side with lower costs (and a long haul programme to boot, with new equipment)

This is going to be one to keep an eye on – and sadly, I don’t think this is going to end very well for many people.

One things is certain: SAS will have to be a leaner and more profitable outfit… and I’m not sure that’s possible even after today…

An update on the state of SAS, with some good news, and some not so good news.

The airline has now agreed changes with seven out of the eight unions representing employees in regards to wages cuts, working schedule changes and pensions.

Only the cabin crew union of Denmark has yet to reach agreement with management.

The airline needs to get agreement from all eight unions as a condition of a 3.5 billion Swedish crown ($515 million) loan from the governments and six banks.

Espen Pettersen, deputy leader of the main Norwegian cabin union states:

“It has been a very gruelling process.”

“We have made big concessions in this agreement. We are not very happy, but we felt we had no other choice but to sign to secure the jobs and the company.”

The management are aiming to finish talks as soon as possible, but talks have been going on since Sunday, and have spilled over to Monday morning (with them continuing as we speak).

Progress in the talks sent SAS shares soaring.

Hopefully, the final union will seek agreement, and SAS can pull back from the edge.

It seems talks with Unions and SAS Management have continued overnight, with talks going beyond the deadline of yesterday.

As you’re all aware, SAS is trying to reorganise again, and needs buy-in from the unions to make the deep cuts it needs to survive, and there are parts of SAS that are preparing for shutdown – the most worrying example from Bloomberg should scare most people:

Airline management ordered all aircraft outside Scandinavia to be refueled and ready to return to base, and crews on all outbound flights were told to carry enough cash to meet expenses, SAS spokesman Mikkel Thrane said.

If that’s not a sign to worry, I don’t know what is.

SAS spokeswoman Elisabeth Manzi said negotiations were continuing after midnight.

“We continue very intense negotiations, but we cannot currently say when they may be concluded.”

Agreement so far has been reached so far with 1 out of 8 unions so. Negotiations are in progress, but this is pretty much a dire situation which needs to be resolved quickly.

Failure to agree will push SAS towards possible bankruptcy protection and bankruptcy.

There are multiple cancellations however today, so check before you travel. This one has also has the ability to turn ugly today, so I’ll be keeping an eye on this too.

For everyone’s sake – I hope SAS survives so that passengers can get home, and employees have job to go to the next day.

It was well reported yesterday that SAS’s future is bleak  with 6,000 jobs for the cut and a SEK3 Billion (or ~US$444 Million) costs savings plan.

More details have emerged with the Norwegian regional airline – Wideroe now on the sale block too, along with SAS Ground Handling.

SAS’s CEO Rickard Gustafson says

“We are facing a very serious situation. That is clear,”

“We have not made money in a number of years and you cannot continue to operate if you don’t make money. We need to create a new business model. We need to stand on our own two feet. That is what we need to demonstrate very rapidly.”

Other assets up for sale make sorry reading with the airline selling some its crown jewels (its some property, even some aircraft engines).

They’re also trying to save money by outsourcing more work to external suppliers including the call centres.

The elephant in the r0oom however is agreement with staff (pilots and cabin crew) with a chilling warning being given out

“The company’s existence is subject to the new collective agreements being reached.“

The plan calls for staff to agree to take pay cuts of up to 17%, and cabin crew pay being cut by an average of 12%.

With SAS’s board meeting again on the 18th November, it could be that time is starting to run out for this carrier unless some serious fixes are found.

SAS’s problems are exhausted by Norwegian Air Shuttle and other low cost carriers eating into its traditional markets. Norwegian is preparing to launch 787 services to Bangkok and New York with a much lower cost base as the crews will be based in Thailand.

Whilst services at the moment are unaffected, I’d be watching extremely carefully what happens next week at the meeting to see if SAS can survive – or if we’ll see the implosion of the airline and something being born out of it that is leaner and meaner…

It seems that pressure from multiple angles has forced SAS to suspend its Copenhagen to Bangkok route.

The route which has been running for over 63 years (and was SAS’s first destination in Asia) will be suspended from 7th April 2013 due to an airline it mentored – Thai Airways International and “Gulf Airlines” – and SAS cannot compete.

Thai Airways International offers direct links from Oslo and Stockholm and Copenhagen as opposed to SAS who ask that you change at Copenhagen for the long haul leg – a convenience to the customer.

Meanwhile, attacking from the other side are the “Gulf Carriers”, who have begun moving into Scandinavian cities, providing much cheaper fares for cost-conscious customers compared to SAS – even with the one-stops in Doha or Dubai.

SAS currently operates it Copenhagen to Bangkok with an Airbus A340-300. SAS will try and make some more money with this aircraft as it expands its USA flying programme when the plane commences a new service from  Copenhagen to San Francisco service which is due to commence on 8th April 2013.

Other airlines are looking at the Bangkok route, with Air France downgrading its service from Paris-CDG to Bangkok, Air Berlin discontinuing its service and handing the route partially over to Etihad (Shuttling passengers to Abu Dhabi and Etihad shuttling to BKK), and even Lufthansa looking at its route to the area.

Certainly, it’s a challenging time in the industry – something that some airlines don’t want as they want to focus on trying to make money….

It’s Sunday again, so it must be time for some airplane art.

Today it’s a SAS Airbus A330-300 parked up a Newark International Airport after completing its long journey from Oslo.

More Airplane art of course next week!

Time for this week’s airplane p0rn.

And this is one taken on the ground in Downtown Seattle – about a block from the Space Needle – A SAS Airbus A340 climbing out and beginning its long flight back to Scandinavia.

More Airplane p0rn next week!