Scandinavian airline SAS struggles to cut costs and axe staff – but still has labour costs three times the industry average.

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• Sweden looks to dump stake in SAS

A number of airlines, such as Singapore Airlines, British Airways and United Airways, has managed to post better-than-expected fourth-quarter earnings. The improved figures were mainly on the back of their action in slashing into labour costs, according to a study by Centre for Asia Pacific Aviation (Capa), an independent provider of aviation market intelligence.

Loss-making Scandinavian airline SAS, on the other hand, has a long way to go to swing back into black. No other airline has higher labour costs.

“The worst in class again was SAS, with unit labour costs still over three times the industry average”, Capa said in its report.

“The Scandinavian carrier has made some recent progress in improving its staff costs, but it still faces a massive task in attaining some semblance of parity to its rivals in the industry".

Last weeks ago SAS announced additional cost savings of 2 billion kronor ($285 million) and a 5 billion kronor rights issue in a move to strengthen its troubled balance sheet. Almost 700 jobs would be cut.

The Swedish government -- the largest owner of SAS -- looks to dump its stakes in the ailing airline as it sought parliamentary approval on Thursday to be allowed to sell its stake at an "opportune moment."

Finnair too, despite substantial cost cuts, still remains exposed, with costs higher than its other main long-haul competitors, such as British Airways, and well above Norwegian, Capa pointed out.

Selected airlines labour cost per ASK and year-on-year labour cost change: Three months ended 31-Dec-2009