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Airline SAS says survival is at stake as pilot strikes establish flights

Airline SAS says survival is at stake as pilot strikes establish flights
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  • Strike shuts down about half of airline’s flights
  • SAS says about 30,000 passengers per day will be affected
  • Strike heightens uncertainty over loss-making airline’s future
  • Biggest airline strike since BA pilots in 2019

STOCKHOLM, July 4 (Reuters) – Collective bargaining between Scandinavian airline SAS (SAS.ST) and its pilots collapsed on Monday, sparking a strike that is jeopardizing the airline’s future and adding to travel chaos across Europe as the summer holiday season begins.

The action marks the first major strike by an airline as the industry seeks to capitalize on the first full post-pandemic recovery in leisure travel.

Months of acrimony between staff and management follow as the airline tries to recover from the effects of the lockdowns without taking on costs it believes would remain competitive.

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

A strike could cost SAS nearly 100 million Swedish kronor ($10 million) a day, calculated Sydbank analyst Jacob Pedersen, and the company’s future ticket sales would suffer. SAS shares were down 4.7% by 1511 GMT.

“A strike at this point is devastating for SAS and puts the future of the company, along with the jobs of thousands of colleagues, at stake,” SAS chief executive Anko van der Werff said in a statement.

“The decision to go on strike now shows reckless behavior by the pilots’ unions and a shockingly poor understanding of the critical situation in which the SAS finds itself.”

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

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

COMMERCIAL DEBT

Union leaders blamed the SAS.

“We finally realized that SAS doesn’t want an agreement,” Martin Lindgren, chair of the SAS pilot group, told reporters. “SAS wants a strike.”

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

Unions said nearly 1,000 pilots in Denmark, Sweden and Norway will join the strike, which is one of the largest airline strikes since British Airways pilots grounded most of the airline’s flights in 2019 over a dispute over pay to have.

Further disruption loomed when British Airways workers at London’s Heathrow Airport voted to strike over pay in June. Continue reading

Also Spain based cabin crew at Ryanair (RYA.I) and easyJet (EZJ.L) plan to strike this month to demand better working conditions, and workers at Paris Charles de Gaulle Airport walked off the weekend to demand a pay rise. Continue reading

Sofia Skedung, 38, arrived at Stockholm’s Arlanda Airport to find the SAS flight she and her family had booked for a charter trip had been cancelled.

“I was planning to go to Corfu with my family for a week’s holiday, which we were really looking forward to as we haven’t traveled in a very long time,” she said as she searched the departure lounge for SAS staff, to no avail.

“It’s very, very messed up here,” she added.

BUSIEST WEEK

Loss-making SAS is attempting to restructure its business through major cost-cutting, raising cash and converting debt into equity. Continue reading

“This is about finding investors. How on earth is a strike going to help find and attract investors in the busiest week in 2.5 years?” van der Werff to reporters.

The airline, which is partly owned by the governments of Sweden and Denmark, estimated the strike would result in the cancellation of around 50% of scheduled SAS flights and would affect around 30,000 passengers a day, roughly half its daily load factor .

Denmark has said it is willing to provide more cash and write off debt on condition the airline also brings in private investors, while Sweden has refused to inject more money.

Norway sold its stake in 2018 but holds debt in the airline and has said it may be ready to convert it into equity. Continue reading

Denmark’s Finance Minister Nicolai Wammen said in an email comment to Reuters he hoped the parties would find a solution as soon as possible.

The collective agreement between the airline and the SAS Pilot Group union expired on April 1st. Months of negotiations that began last November failed to bring about a new deal.

Pilots were upset by SAS’ decision to hire pilots through two new subsidiaries – Connect and Link – rather than first rehiring former employees who were laid off during the pandemic, when nearly half of pilots lost their jobs.

A strike would include all pilots at parent company SAS Scandinavia but not Link and Connect, a union organizing the two units’ 260 pilots. According to the company, the external SAS partners Xfly, Cityjet and Airbaltic would also not be affected.

SAS had already canceled many flights before the summer, part of a broader trend in Europe where, in addition to strikes, operators have responded to staff shortages caused by slow post-pandemic recovery.

($1 = 10.3436 Swedish Krona)

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

Our standards: The Thomson Reuters Trust Principles.

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