SAS reducing its workforce by 40%

SAS area at Stockholm Arlanda airport

Scandinavian airline SAS is to axe 3,000 jobs, in a major restructuring following big losses in 2008.

Another 5,600 employees will leave as part of operations that are to be sold or outsourced, as overall staff numbers are cut by 40% from 23,000 to 14,000.

It comes as it reported net losses of 6.32bn kronor ($757m; £532m) in 2008, 2.77bn in the fourth quarter alone, after a profit of 636m kronor in 2007.

The Stockholm-based carrier is to also sell Air Baltic, and shed other stakes.

Financial plan

The biggest divestment will come as the airline sells its money-losing Spanish subsidiary Spanair unit to a Spanish consortium for one euro, which will see 3,000 employees leaving SAS's operations.

SAS said the yearly figure included a loss of 4.89bn kronor associated with that sale.

It hopes to sell its interests in Spirit, Air Greenland, BMI, Estonian Airways, Skyways, Cubic and Trust, as it concentrates on business travel in the Nordic market.

The carrier has also announced it would make a 6bn kronor rights issue, as part of a financial recovery plan called Core SAS.

'Turbulent year'

The Stockholm-based airline said the share rights issue was supported by the governments of Sweden, Denmark and Norway - which own half of the struggling firm.

It also has the backing of its biggest private shareholder, Sweden's powerful Wallenberg family.

Airlines such as SAS have been struggling for years with overcapacity, falling demand, and competition from budget airlines.

Easing oil prices have brought some relief but the firm is now pressing ahead with its Core SAS programme.

SAS Chief Executive Mats Jansson said 2008 was "one of the most challenging and turbulent years that the entire aviation industry has ever experienced".

"During the year, we saw a period of record-high oil prices, a financial crisis that heavily intensified during the final quarter and which led to an economic recession in many markets," he added.