- Coat to the ground about half of the airline’s flights
- SAS says it will affect around 30,000 passengers per day
- Strike increases uncertainty about the future of loss-making airlines
- Biggest air strike since BA pilots in 2019
STOCKHOLM, July 4 (Reuters) – Wage talks between the Scandinavian airline SAS (SAS.ST) and its pilots collapsed on Monday, triggering a strike that jeopardizes the airline’s future and contributes to travel chaos across Europe as the peak summer holiday period begins.
The action is the first major air strike to hit when the industry tries to take advantage of the first full upswing in leisure travel after the pandemic.
There are months of bitterness between employees and management when the airline tries to recover from the effects of shutdowns without incurring costs it believes will make it unable to compete.
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At the same time, employees across Europe are demanding wage increases while struggling with rising inflation.
A strike could cost SAS almost 100 million Swedish kroner (10 million dollars) per day, calculated Sydbank analyst Jacob Pedersen, and the company’s future ticket sales will suffer. Shares in SAS were down 4.7% by 1511 GMT.
“A strike at this time is devastating for SAS and puts the company’s future together with the jobs of thousands of colleagues at stake,” SAS CEO Anko van der Werff said in a statement.
“The decision to go on strike now shows ruthless behavior from the pilots’ unions and a shockingly low understanding of the critical situation SAS is in.”
Sydbanks Pedersen said that the strike could wipe out up to half of the airline’s cash flow of more than NOK 8 billion during the first four to five weeks alone in the worst case, and that it is guaranteed to leave “deep wounds” among affected passengers. .
“SAS has too much debt and too high costs, and is thus not competitive. In other words, SAS is a company that is flying towards bankruptcy,” he said in a research note.
Trade union leaders blamed SAS.
“We have finally realized that SAS does not want an agreement,” SAS Pilot Group chairman Martin Lindgren told reporters. “SAS wants strike”.
Lindgren said that the pilots were ready to resume talks, but asked SAS to change its position.
The unions said that almost 1,000 pilots in Denmark, Sweden and Norway will join the strike, which is one of the largest airlines’ withdrawals since British Airways pilots in 2019 grounded most of the airline’s flights in a wage dispute.
Further disruption threatens when British Airways employees at London’s Heathrow airport voted in June to strike over pay. read more
In addition, Spanish-based cabin crew at Ryanair (RYA.I) and easyJet (EZJ.L) are planning to strike this month to demand better working conditions, and workers at Paris’ Charles de Gaulle airport halted work over the weekend to demand a pay rise . read more
Sofia Skedung, 38, arrived at Arlanda Airport in Stockholm to find the SAS plane she and her family had booked for a charter trip, was canceled.
– I was going to travel with my family to Corfu on holiday for a week, something we had really looked forward to since we have not traveled for a very long time, she said when she searched in vain in the departure hall for SAS employees.
“Everything is very, very confused here,” she added.
MOST HAPPY WEEK
Loss-making SAS seeks to restructure its operations through major cost cuts, raising cash and converting debt into equity. read more
“This is about finding investors. How in the world does a strike in the busiest week of the last 2.5 years help find and attract investors?” said van der Werff to journalists.
The airline, which is partly owned by the governments of Sweden and Denmark, estimates that the strike will lead to the cancellation of around 50% of the scheduled flights from SAS and affect around 30,000 passengers per day, about half of the daily cargo.
Denmark has said it is willing to give more cash and write off debt on condition that the airline also brings in 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 that it may be willing to convert it into equity. read more
Denmark’s Minister of Finance Nicolai Wammen said in an e-mail comment to Reuters that he hopes the parties will reach a solution as soon as possible.
The collective agreement between the airline and the trade union SAS Pilot Group expired on 1 April. Months of negotiations, which began in November last year, have not been able to conclude a new agreement.
Pilots became angry over SAS’s decision to hire pilots through two new subsidiaries – Connect and Link – instead of first re-employing former employees who were laid off during the pandemic, when almost half of the pilots lost their jobs.
A strike will include all pilots from the parent company SAS Scandinavia, but not Link and Connect, a union that organizes the 260 pilots associated with the two units. It will also not affect SAS ‘external partners Xfly, Cityjet and Airbaltic, the company has said.
SAS had already canceled many flights ahead of the summer, part of a broader trend in Europe, where operators, in addition to the upheaval of strikes, have responded to staff shortages created by slow re-employment following the pandemic.
($ 1 = 10.3436 Swedish kronor)
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Further reporting by Stine Jacobsen in Copenhagen and Alex Cornwall in Dubai; written by Niklas Pollard; editing by Barbara Lewis and Emelia Sithole-Matarise
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