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SAS airline says survival is at stake as pilots’ strike cancels flights

SAS airline says survival is at stake as pilots' strike cancels flights
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  • The strike paralyzed approximately half of the airline’s flights.
  • SAS says it will affect about 30,000 passengers per day
  • The strike increases uncertainty about the future of the loss-making airline
  • Biggest airline strike since BA pilots in 2019

STOCKHOLM, July 4 (Reuters) – Salary negotiations between Scandinavian airline SAS (SAS.ST) and its pilots collapsed on Monday, triggering a strike that puts the airline’s future at risk and adds to travel chaos across Europe as the peak summer holiday period kicks off.

The action is the first major strike by an airline as the industry looks to capitalize on the first full uptick in leisure travel after the pandemic.

It follows months of acrimony between employees and management as the airline seeks to recover from the impact of the lockdowns without taking on costs that it believes would leave it unable to compete.

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At the same time, employees across Europe are demanding salary increases as they battle rising inflation.

A strike could cost SAS nearly 100 million Swedish kronor ($10 million) a day, Sydbank analyst Jacob Pedersen has calculated, with the company’s future ticket sales taking a hit. SAS shares fell 4.7% at 1511 GMT.

“A strike at this time is devastating for SAS and puts the future of the company and 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 demonstrates reckless behavior by the pilots’ unions and a shockingly low understanding of the critical situation SAS finds itself in.”

Sydbank’s Pedersen said the strike could wipe out up to half of the airline’s cash flow of more than 8bn crowns in the first four to five weeks alone in the worst case, leaving “deep wounds” between affected travelers. . .

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

BLAME TRADE

Union leaders blamed SAS.

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

Lindgren said the pilots were ready to resume talks but asked SAS to change its position.

The 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 in 2019 canceled most of the airline’s flights due to a wage dispute.

More disruption looms as British Airways staff at London’s Heathrow airport voted in June to strike over wages. read more

In addition, Ryanair’s Spain-based cabin crew (RYA.I) and easyJet (EZJ.L) plans to strike this month to demand better working conditions, and workers at Paris’s Charles de Gaulle airport walked out over the weekend to demand a pay rise. read more

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

“I was going with my family to Corfu for a week’s holiday, something we were really looking forward to as we hadn’t traveled in a long time,” he said as he searched the departure lounge in vain for SAS personnel.

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

BUSY WEEK

SAS, which is posting losses, is seeking to restructure its business through deep cost cuts, raising cash and converting debt into equity. read more

“This is all about finding investors. How does a strike in the busiest week in the last two and a half years help find and attract investors?” van der Werff told reporters.

The airline, which is partly owned by the Swedish and Danish governments, estimated that the strike would lead to the cancellation of around 50% of SAS’s scheduled flights and affect some 30,000 passengers a day, about half of its daily cargo.

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

Norway sold its stake in 2018 but has debt in the airline and has said it may be willing to convert it into equity. read more

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

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

Pilots were angered by SAS’s decision to hire pilots through two new subsidiaries, Connect and Link, rather than first rehire former employees laid off during the pandemic, when almost half of its pilots lost their jobs.

A strike would include all pilots from parent company SAS Scandinavia, but not Link and Connect, a union that organizes the 260 pilots attached to the two units. It also would not affect SAS’s third-party partners, Xfly, Cityjet and Airbaltic, the company said.

SAS had already canceled many flights before the summer, part of a broader trend in Europe, where, in addition to the turmoil of the strike, operators have responded to staff shortages created by slow rehiring after the pandemic.

(1 = 10.3436 Swedish kronor)

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

Our standards: The Thomson Reuters Trust Principles.

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