SAS to raise cash, cut 700 jobs after Q4 loss

By KARL RITTER, Associated Press Writer Karl Ritter, Associated Press Writer – 59 mins ago

The struggling travel group also announced it would ramp up its savings program and slash 700 jobs to reduce costs by an additional 2 billion kronor.

"It is an incredibly bad signal to send to the markets," Sydbank analyst Jacob Pedersen said of the new rights issue. "SAS is in a very tough situation now."

SAS said the new rights issue was supported by its major shareholders: the governments of Sweden, Denmark and Norway, which together hold a 50 percent stake, and Sweden‘s powerful Wallenberg family. It‘s subject to a final agreement with SAS unions and approval by an extraordinary general meeting planned for April 7.

SAS streamlined its operations last year, cutting its staff by 30 percent to about 16,500 in the fourth quarter, shedding subsidiary airlines and focusing on its core carrier Scandinavian Airlines, which targets business travel in the Nordic region.

The company said Tuesday it had achieved about 66 percent of the targeted 5.3 billion kronor in savings, but new measures were needed to reduce costs by an additional 2 billion kronor. The new initiatives would include 700 job cuts this year and in 2011.

He said the new measures to improve the balance sheet "will give SAS the strength and flexibility it needs to compete effectively and be well positioned for the market recovery."

"Like the rest of the airline industry, SAS is in middle of one of the worst crises ever," Danish Finance Minister Claus Hjort Frederiksen said. "As a responsible owner, we found it right to back up the company‘s efforts."

Associated Press Writers Louise Nordstrom in Stockholm, Jan M. Olsen in Copenhagen and Ian MacDougall in Oslo contributed to this report.

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