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SAS and Braathens are joining forces

The SAS administration is suggesting that SAS and Braathens join forces, and the employees in both companies must prepare themselves on taking a pay cut.

There have been speculations for some time if the SAS administration was going to drop the Braathens name in Norway and concentrate on building the trademark SAS. The SAS administration took the step and sent out a press release of the planned collaboration Wednesday, in spite the fact that nothing has been decided.

“We do this in order to avoid further speculations,” said Simon Revold, information director at SAS, to TV 2 Nettavisen.

SAS or Braathens or¿?
According to Revold, it has not yet been decided if the new company will be called SAS or Braathens.

“Name and trademark have not at all been decided yet,” Revold stated. “We have as a goal that the board should reach a decision in March. The new company will be active already in May, and it is likely that also those questions will be answered in the process.”

If the two companies join forces, this will affect both the inland traffic in Norway and the traffic out of the country. According to the SAS administration, there will be large changes in the way the business is organized in Sweden and Denmark as well. The SAS owned Widerøe will not be affected by the reorganization.

Discount prices
According to the administration, the new company will to be able to offer prices on the same level as the discount companies are doing today. At the same time, the company is going to maintain the network structure which exists today.

“It is going to be a company that is both competitive in the low price market, but at the same time meet the needs of the business travellers,” said Knut Løvstuhagen, head of information at Braathens, to TV 2 Nettavisen. “It’s completely necessary to make the company more competitive.”

Suggest salary cuts
At the time being the merger is only on the drawing table, stressed Løvstuhagen. A final decision will not be reached until the employees in SAS and Braathens have had their chance to express their opinions.

The group management in SAS wants, among other things, the employees in both companies take a cut in salary and benefits, as it is crucial to give the company increased ability to compete.

A handful of SAS tops took a salary cut of about 10 percent before Christmas. The SAS deficit in 2003 is estimated to be NOK 1.6 billion (USD 235 million).

It is not decided if the assets to SAS Norge will be shoved into Braathens or visa versa, or if a completely new company will be created.

According to SAS press release, a company like that will either mean that all the business is collected in one of the existing companies, or in a new one.

Employees rank equally
The only thing that appears clear is that the employees in both SAS and Braathens will bring with them their seniority into the new company, and they will rank equally when it comes to possible demanning.

“This is just to avoid misunderstandings,” Revold stated. “The main point is that the employees take with them the rights in form of seniority and such things.”

Sensible that Braathens takes over
The decision to join the two companies in Norway does not come as a surprise on the market as there have been speculations about the possibilities of this for a long time.

Bjørn Bakkevik, aviation analyst in DnB Nor Markets, predicts that Braathens will take over the routes Scandinavian Airlines flying inland today.

“It is most sensible that Braathens takes over inland,” he said to TV 2 Netteavisen. “Braathens has the lowest costs, and Scandinavian has been falling behind the whole way. Either the cost must be cut or something like this will happen.”

Bakkevik said he thinks the collaboration will be rather unproblematic to complete, and he thinks likely problems will be connected to the labor unions.

“SAS has better circumstances then Braathens has today,” Bakkevik said. “They have higher salaries and better agreements, but at the same time, this is a process that has to take place regardless.”

Keeps the SAS name
At the same time, Bakkevik predicts the group will choose to keep the SAS name, in spite of the fact that it is the old Braathens that is behind the flights.

“Braathens has a good name in Norway, but outside the country’s borders, the name is weaker, and that is way I think they are going to choose the SAS name, which is much better known internationally,” said Bakkevik.

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