Airline SAS says survival is at risk as pilot strike grounds flights

  • Strike to ground nearly half of airlines’ flights
  • SAS says around 30,000 passengers per day will be affected
  • The strike raises uncertainty over the future of the loss-making airline
  • Biggest airline strike since BA pilots in 2019

STOCKHOLM, July 4 (Reuters) – Wage talks between Scandinavian airline SAS (SAS.ST) And its pilots collapsed on Monday, triggering a strike that puts the carrier’s future at risk and adds to travel chaos across Europe as the peak summer holiday season begins.

The move is the first major airline strike to hit as the industry tries to take advantage of the first full recovery in leisure travel following the pandemic.

It follows months of infighting between staff and management as the airline seeks to recover from the impact of the lockdowns.

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

Sydbank analyst Jacob Pedersen calculated that a strike would cost SAS nearly 100 million Swedish crowns ($10 million) a day, and would affect the company’s future ticket sales. Shares of SAS were down 4.7% at 1511 GMT.

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

“The decision to go on strike now reveals the irresponsible behavior of the pilots’ unions and a shocking lack of understanding of the dire situation of the SAS.”

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

“SAS has high debt and high costs and is thus not competitive. SAS is a company that is flying towards bankruptcy,” he said in a research note.

Trade blame

Union leaders S.A.S.

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

Lindgren said the pilots were ready to resume negotiations, 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 walkouts since British Airways pilots grounded most of the carrier’s planes in 2019 over a pay dispute.

Further disruption occurred in June when British Airways staff at London’s Heathrow Airport voted to strike over pay. read more

Additionally, Ryanair has a Spanish-based cabin crew (RYA.I) and EasyJet (EZJ.L) It plans to strike this month. Workers at Paris’s Charles de Gaulle airport walked off the job over the weekend to demand better working conditions and a pay rise. read more

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’m going to go on holiday to Corfu with my family for a week and we’ve been looking forward to it as we haven’t traveled in a long time,” she said, searching the departure hall for SAS staff in vain.

“Everything is very chaotic here,” he added.

Busy week

Loss-making SAS is seeking to restructure its business through major cost cuts, raising cash and converting debt to equity. read more

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

The airline, which is owned by the governments of Sweden and Denmark, estimated that the strike would lead to the cancellation of around 50% of scheduled SAS flights and affect around 30,000 passengers a day.

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

Norwegian sold its stake in 2018, but retains debt in the airline and has said it is willing to convert it into equity. read more

In an emailed statement to Reuters, Denmark’s Finance Minister Nicolai Wammen said he hoped the parties would reach a settlement soon.

The collective agreement between the airline and the SAS pilot group union expired on April 1. Months of negotiations that began last November have not concluded a new deal.

Pilots were angered by SAS’ decision to hire pilots through two new subsidiaries, Connect and Link, instead of first hiring ex-employees laid off during the pandemic.

A strike includes all pilots from parent company SAS Scandinavia, but not Link and Connect, the union that organizes 260 pilots affiliated to both divisions. SAS’ external partners Xfly, Cityjet and Airbaltic will not be affected, the company said.

SAS has already canceled several flights ahead of the summer, part of a wider trend in Europe where operators have responded to staff shortages created by slow hiring since the pandemic, in addition to a surge in strike action.

($1 = 10.3436 Swedish crowns)

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Additional reporting by Stine Jacobson in Copenhagen and Alex Cornwall in Dubai; By Nicholas Pollard; Editing by Barbara Lewis and Emilia Sithole-Madaris

Our Standards: Thomson Reuters Trust Principles.

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