Airline SAS says survival is at stake as pilot strike prepares ground for flights

STOCKHOLM, July 4 (Reuters) – Fee talks between Scandinavian airline SAS (SAS.ST) and its pilots crashed on Monday, triggering a strike that put the carrier’s future at risk and added to travel chaos in Europe as the peak summer holiday season began.

The action is the first major airline strike to take place as the industry tries to take advantage of the first full recovery in leisure travel after the pandemic.

The airline has been following months of hostility between employees and management as it tries to recover from the effects of quarantines without incurring costs that it believes will render it uncompetitive.

At the same time, workers across Europe are demanding wage increases as they fight rising inflation.

Sydbank analyst Jacob Pedersen calculated that the strike could cost SAS about 100 million Swedish kronor ($10 million) per day, hurting the company’s future ticket sales. Shares in SAS were down 4.7% as of 1511 GMT.

“A strike at this point is devastating for SAS and jeopardizes the future of the company along with the jobs of thousands of colleagues,” SAS Chief Executive Officer Anko van der Werff said in a statement. Said.

“The decision to strike demonstrates the reckless behavior of the pilot unions and a shockingly low understanding of the critical situation SAS is in.”

Sydbank’s Pedersen said the strike would, in the worst-case scenario, wipe out half of the airline’s cash flow in excess of SEK 8 billion in just the first four to five weeks, leaving “deep wounds” among the passengers affected. .

“SAS has a lot of debt and very high costs and is therefore not competitive. SAS is, in other words, a company flying towards bankruptcy,” he said in a research note.

TRADE CRIME

Union leaders blamed the SAS.

“We finally realized that SAS didn’t want a deal,” Martin Lindgren, head of SAS Pilot Group, told reporters. “SAS wants a strike.”

Lindgren said the pilots were ready to resume talks, but urged SAS to change its stance.

About 1,000 pilots in Denmark, Sweden and Norway will join the strike, unions said.

Further disruption came in June when British Airways staff at London’s Heathrow airport went on strike over pay. Read more

Also, Hispanic cabin crew at Ryanair (RYA.I) and easyJet (EZJ.L) They plan to go on strike this month to demand better working conditions, and workers at Paris’ Charles de Gaulle airport stopped work over the weekend to demand a wage increase. Read more

Sofia Skedung, 38, arrived at Stockholm’s Arlanda airport to find that her SAS flight, which had been booked for herself and her family on a charter trip, had been cancelled.

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

“Everything is very, very complicated here,” he added.

HIGHEST WEEK

Loss-making SAS is trying to restructure its business by making massive cost cuts, raising cash and turning debt into equity. Read more

“It’s all about finding investors. How could a strike help find and attract investors during the busiest week in the last 2.5 years?” van der Werff told reporters.

Partly owned by the Swedish and Danish governments, the airline estimates that the strike will result in the cancellation of around 50% of its scheduled SAS flights, affecting around 30,000 passengers per day, roughly half of its daily cargo.

Denmark said it was willing to provide more cash and write off debt, provided the airline also brought in private investors, while Sweden refused to inject any more money.

Norway sold its stake in 2018, but it has debt with the airline and has said it may want to turn it into equity. Read more

Danish Finance Minister Nicolai Wammen said in an email comment to Reuters that he hoped the parties would reach a solution as soon as possible.

The collective agreement between the airline and the SAS Pilot Group syndicate expired on 1 April. Negotiations, which began last November, failed to reach a new agreement.

The pilots were angered by SAS’ decision to hire pilots through two new subsidiaries, Connect and Link, rather than first rehiring ex-employees laid off during the pandemic, when nearly half of its pilots lost their jobs.

A strike would involve all pilots from parent company SAS Scandinavia, but not Link and Connect, a union that organizes 260 pilots affiliated with the two units. The company said it would also not affect SAS’ external partners Xfly, Cityjet and Airbaltic.

SAS had already canceled several flights prior to the summer as part of a wider trend in Europe; In addition to the riot of strike action, operators have responded to staff shortages created by slow re-hires post-pandemic.

($1 = 10.3436 Swedish kronor)

Additional reporting by Stine Jacobsen in Copenhagen and Alex Cornwall in Dubai; By Niklas Pollard; Editing by Barbara Lewis and Emelia Sithole-Matarise

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