Scandinavian airline SAS Group knows how to swing the company back into profit – it's just to copy a Norwegian competitor.

Hardly a week goes by without new dreadful reports about falling passenger figures or failing negotiations with the workers’ unions. On Monday SAS Group, half-owned by Sweden, Norway and Denmark, is likely to reports its eighth uninterrupted quarterly net loss, which is expected to amount to 360 million kronor (€35 million, $50 million).

Perhaps even more annoying for the airline's management is the fact that its main rival, Norwegian Air Shuttle, a public low-cost airline noted on the Oslo Stock Exchange, keeps increasing its revenue as the number of passengers swells.

“Norwegian is doing extremely well at the moment. They are very quickly getting a large chunk of the market”, Jacob Pedersen, senior aviation analyst at Danish Sydbank, told The Swedish Wire. “From a consumers’ point of view they seem to be doing everything right”.

Despite the global turndown the Norwegian airline increased its third-quarter revenue by 15 percent to 2.3 billion Norwegian kronor. Although its net profit fell 9 percent to 375 million kronor earnings are steady in the black and its stock share prize has increased 170 percent during the last three month.

And while SAS has cut its fleet by 21 airplanes, Norwegian recently ordered six brand new Boeing 737-800 airplanes worth a total of between $435 million and $486 million at list prices.

SAS Group's plan to turn the ailing airline around and swing back into profit is – simply put – to do as Norwegian does.

“We are benchmarking against Norwegian”, said SAS’ vice president of corporate communications Bertil Ternert. “They have stepped in on the Scandinavian market very successfully”.

He hailed Norwegian for its slim administration, successful point-to-point shuttle traffic, standardized airplane models and how it buys most of its services externally. All this makes Norwegian – by the same model as Ryanair – considerably less costly to run. As a result, Norweigan can offer similar quality as SAS but with more competitive prizes. In the long-run that's of course an untenable situation for SAS.

“We don’t want to start they day by having a handicap. Other airlines, like Norwegian, can do what we do with 25 percent lower costs”, Bertil Ternert said.

“Not until we have closed that gap we can compete for real. Not until then we can strike back, retake market shares and enter new markets”.

SAS Group is currently implementing its strategic approach - Core SAS – that includes cost reduction initiatives of 4.5 billion kronor as well as a 20 percent reduction in capacity. In August it launched an entirely new cost program amounting to 2 billion kronor.

"It is essential that we now completely close SAS's cost gap with our competitors", chief executive officer Mats Jansson said at the time. "This is a matter of competing on equal conditions and, ultimately, about the survival of SAS".

As a result a total of 3,000 employees will lose or has already lost their jobs, plus an addition of 5,600 persons in those companies that will be sold or outsourced. Grim negotiations with workers’ unions are ongoing and results of the talks will be presented on Monday.

Core SAS is far from just being about cutting costs. It’s main focus is rather to get the airline back to its roots; being the leading airline in Northern Europe. Therefore it has dumped its subsidiaries Spanair, Estonian Air and Air Baltic and sold its stake in British BMI to Lufthansa.

The organization will also be simplified in order to cut the clutter that previous executive officer Jørgen Lindegaard created when he decentralized the concern into a niggling number of separate companies.

“Jørgen Lindegaard’s model wasn’t successful. It all got to provincial”, Bertil Ternert said.

Large sums of money are being used to make the dream about Core SAS come true. Bertil Ternert has no doubts that the airline will be in full bloom as soon as its strategic moves have been realized. He also points out that the company actually made a second-quarter profit of 38 million kronor before nonrecurring items in continuing operations.

Today SAS is Europe’s most punctual airline and customer satisfaction is on a ten-year high. It has also launched appreciated services such as mobile boarding passes and fast-track systems.

However, the saving program has also upset loyal customers because of unpopular changes in the Euro Bonus loyalty program.

“When costs have been cut it’s extremely important to improve their commercial offering to the costumers”, Jacob Pedersen said, adding:

“If Mats Jansson can bring SAS out of this he will be a hero”.