SAS says survival is at stake as pilot’s strike halts flights

STOCKHOLM (Reuters) – Fares talks between Scandinavian airline SAS (SAS.ST) Its pilots collapsed on Monday, triggering a strike that puts the company’s future at risk and adds to travel chaos across Europe as the peak summer holiday period begins.

The measure is the first major airline strike to strike as the industry seeks to capitalize on the first full recovery in leisure travel after the pandemic.

It comes after months of tension between staff and management as the airline seeks to recover from the impact of the shutdowns without incurring the costs it believes will make it uncompetitive.

At the same time, employees across Europe are calling for higher wages while suffering from rising inflation.

The strike could cost nearly SEK 100 million ($10 million) a day, says Sydbank analyst Jakob Pedersen, and future ticket sales for the company will suffer. SAS shares were down 4.7% by 1511 GMT.

“The blow at this point is devastating to SAS and puts the future of the company along with the jobs of thousands of colleagues on the line,” SAS CEO Anko van der Werf said in a statement.

“The decision to strike now shows reckless behavior by the pilots’ unions and a shockingly low understanding of the critical situation in which the SAS lives.”

Sydbank’s Pedersen said the strike could wipe out up to half of the airline’s cash flow of more than 8 billion crowns in the first four to five weeks alone in a worst-case scenario, and is bound to leave “deep wounds” among affected travelers. .

“SAS has too much debt and too high costs, and is therefore not competitive. In other words, SAS is heading for bankruptcy,” he said in a research note.

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Union leaders blamed SAS.

“We have finally realized that SAS does not want an agreement,” Martin Lindgren, president of SAS Pilot Group, told reporters. “Sass want a blow.”

Lindgren said the pilots were ready to resume talks, but called on the SAS to change its position.

Unions said nearly 1,000 pilots in Denmark, Sweden and Norway would join the strike, one of the biggest airline strikes since British Airways pilots in 2019 ground most of the company’s flights over a wage dispute.

More disruption looms as British Airways employees at London Heathrow Airport in June voted to strike over wages. Read more

Additionally, Ryanair’s Spain-based cabin crew (RYA.I) And easyJet (EZJ.L) It plans to strike this month to demand better working conditions, and workers at Paris’s Charles de Gaulle airport are off work for the weekend to demand higher wages. Read more

Sophia Skidung, 38, arrived at Arlanda Airport in Stockholm to find that a SAS flight that she and her family had booked for a charter flight had been cancelled.

“I was going with my family to Corfu for a week off, which we were really looking forward to because we haven’t traveled for a really long time,” she said as she searched the departure hall in vain for the SAS staff.

“Everything here is very confused,” she added.

Most busy week

Lossless SAS seeks to restructure its business through deep cost reductions, raise cash and convert debt into equity. Read more

“This is all about finding investors. How much on earth have you been on strike in the busiest weeks of the last 2.5 years to help find and attract investors?” Van der Werf told reporters.

The airline, which is partly owned by the governments of Sweden and Denmark, has estimated that the strike will result in the cancellation of about 50% of scheduled SAS flights and will affect about 30,000 passengers per day, nearly half of its daily load.

Denmark said it was ready to offer more liquidity and write off debt on the condition that the airline brought in private investors as well, while Sweden refused to inject more money.

Norway sold its stake in 2018, but it has debt in the airline, and has said it might be willing to convert that into equity. Read more

Danish Finance Minister Nikolai Wamen said in an emailed comment to Reuters that he hopes the two sides will reach a solution as soon as possible.

The collective agreement between the airline and the consortium of the SAS Pilot Group expired on 1 April. Months of negotiations, which began last November, have failed to conclude a new deal.

Pilots were angered by SAS’ decision to hire pilots through two new affiliates — Connect and Link — rather than rehiring former employees who were fired during the pandemic, when nearly half of the pilots lost their jobs.

The strike will include all pilots from parent company SAS Scandinavia, but not Link and Connect, an association that regulates the 260 pilots attached to the two units. The company said it would not affect SAS’s external partners Xfly, Cityjet and Airbaltic.

SAS has already canceled many flights before the summer, as part of a broader trend in Europe, where, in addition to strike disruptions, operators have responded to staff shortages caused by slow re-employment after the pandemic.

(1 dollar = 10.3436 Swedish krona)

Additional reporting by Stein Jacobsen in Copenhagen and Alex Cornwall in Dubai. writing by Niclas Pollard; Editing by Barbara Lewis and Emilia Sithole Mataris

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