Feb. 3 (Bloomberg) -- SAS Group, the owner of Scandinavian Airlines, plans to eliminate 3,000 jobs and scale back its route network to restore earnings after more than a year of losses.

SAS tumbled 17 percent in Stockholm trading, the biggest drop in at least 12 1/2 years, after the company posted a wider fourth-quarter loss and said it plans to sell as much as 6 billion kronor ($726.4 million) in stock. Including disposals, SAS’s reorganization will cut about 9,000 jobs, or 43 percent of the company’s workforce at the end of last year.

Chief Executive Officer Mats Jansson is selling divisions based abroad and working to attract business travelers, building on a two-year-old strategy of focusing on SAS’s home Nordic region, where Scandinavian Airlines is the largest carrier. The International Air Transport Association predicts the global recession will cause industry passenger numbers to fall 3 percent in 2009 and airlines to log combined losses of $2.5 billion.

“They’re cutting deep this time, but it’s necessary if they are going to be profitable,” Lars Heindorff, an analyst at ABG Sundal Collier in Copenhagen with a “sell” recommendation on SAS stock, said in an interview. “It’s going to make it more attractive from a consolidation point of view but, if you look at the operations, it’s really bad.”

Shares Plunge

SAS slumped 7.3 kronor to 35.8 kronor. The stock had gained 14 percent from the beginning of 2009 until yesterday, the best performance at the time on the 11-member Bloomberg Europe Airlines Index, following speculation that Deutsche Lufthansa AG will bid for the company. SAS is down 5.5 percent this year.

Jyske Bank A/S, Denmark’s second-largest provider of financial services, cut its recommendation on SAS to “sell” from “buy” today, saying SAS’s share-sale plan would make the company less attractive to Lufthansa.

SAS said today that it renegotiated about $770 million of loans to bolster finances after posting its fifth consecutive quarterly loss. SAS extended the maturity of its 366 million-euro ($470 million) revolving credit line by two years to June 2012.

The carrier intends to withdraw 14 aircraft from service and reduce capacity by 20 percent as part of its reorganization, which the Stockholm-based company has named “Core SAS” and follows the Strategy 2011 savings program begun 18 months ago.

Charge for Spanair

Division sales so far have included the Palma de Majorca, Spain-based Spanair unit to a group of investors from Spain’s Catalonia region, which resulted in a 712 million-krona charge in the fourth quarter, and SAS’s 47.2 percent holding in Latvian state-controlled carrier AirBaltic to the unit’s management in December for a 169 million-krona capital gain.

SAS’s fourth-quarter loss widened to 2.77 billion kronor, or 2.94 kronor a share, from 596 million kronor, or 0.1 krona, a year earlier. Sales declined 0.7 percent to 12.9 billion kronor. The full-year net loss was 6.26 billion kronor, or 38.1 kronor a share, compared with net income of 637 million kronor, or 4.69 kronor, in 2007. Revenue rose 5.1 percent to 53.2 billion kronor.

The company reiterated that, among planned divestures, the company aims to sell its 20 percent holding in Castle Donington, England-based BMI, the second-biggest airline at London’s Heathrow airport. Another 5,600 employees will leave the company as it sells more divisions, which include the Air Greenland and Estonian Air passenger brands and Spirit cargo-handling unit.

To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net; Jakob Lindstroem in Stockholm at and jlindstroem@bloomberg.net.