A cost-cutting survival plan will see 800 jobs cut at SAS and the sale of Norwegian regional carrier Wideroe.
The Scandinavian airline’s ground handling unit is also being offloaded.
The action will lead to total staff numbers being reduced from 15,000 to around 9,000.
Employees face pay cuts of up to 17%, depending on what part of the business they work in. Cabin staff will see their pay reduced on average by 12%.
SAS, which has not made an annual profit since 2007, needs to make savings to secure a new $520 million credit facility from seven banks and the governments of Denmark, Sweden and Norway.
Chief executive Rickard Gustafson admitted: “This truly is our ‘final call’ if there is to be a SAS in the future.
“I know that we are asking a lot of our employees, but there is no other way. I hope that our loyal and dedicated employees are willing to fight for the survival of SAS and for our jobs.”
The group, which faces low-cost competition from the likes of Norwegian and Ryanair, expects to make a slight pre-tax loss this year.
SAS flew 27.1 million passengers in 2011 with 15,000 employees, whereas Norwegian carried 15.7 million passengers with 2,555 staff at end 2011.
SAS aims to improve earnings by around $500 million through the cost cuts while asset sales would strengthen the balance sheet by a further $500 million
But it also needs to trim a $1.78 billion pension deficit by changing the terms of its pension plan and other measures.