SAS agreed severe cost cuts with unions on Monday in a deal intended to secure new financing and the airline's long-term survival.  The airline is half owned by the governments of Sweden, Denmark and Norway and said its eight unions backed wage cuts and changes to working schedules and pensions, after talks missed a Sunday deadline and continued through the night.

SAS said it would reduce staff by ~40% to 9,000 and then reduce the workforce by a further 800 with job cuts and decrease some salaries by up to 17% to get new financing from banks and its main owners.

So what happens next?  Obviously staff with the best skills will leave the company. There is always a market for the best and brightest. The less skilled will stay and hold on to their jobs.  But as a service company, this does not bode well. Service levels are likely to decline.  Which means the company already weak, will now only hobble forward.  Is it time for Lufthansa to swoop as we have long expected?  Probably not.

Norwegian is doing well and when it adds 787s the pressure on SAS will increase.  Could the state owners sell their stakes and leave the airline business? You would think so. But that is too rational.  Ireland will not sell its stake in Aer Lingus.  Its a bad thing for a state to own an airline – how many times have we said this?  SAS is likely to suffer a slow death even with state owners.  Too bad, it was a good airline in the day.