SAS airplanes are parked at the Oslo Airport Gardermoen, as Scandinavian airlines (SAS) pilots go on strike, Norway July 4, 2022. Beate Oma Dahle/NTB via REUTERS
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STOCKHOLM, July 17 (Reuters) – Ailing Scandinavian airline SAS (SAS.ST) and striking pilot unions will resume negotiations on Monday, public broadcaster NRK said, after failing to reach new collective agreements over the weekend.
Most SAS pilots in Sweden, Denmark and Norway walked out on July 4 after talks over conditions related to the carrier’s rescue plan collapsed. The parties returned to the negotiating table in the Swedish capital last Wednesday. read more
“We are now going home after 37 hours to get some sleep,” Henrik Thyregod, head of the Danish pilots’ union, said as he left the Stockholm venue where negotiations are held, NRK reported.
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Norwegian pilot union representative Roger Klokset had said earlier on Sunday that the parties may have come closer to a deal overnight.
“Maybe. But I don’t know whether there will be an agreement yet,” he said.
SAS, the main owners of which are Sweden and Denmark, had been struggling to compete with low-cost competition for years before the pandemic slammed the industry. It needs to attract new investors and secure bridge financing, saying that it must first slash costs to achieve those objectives.
Pilots employed in the 75-year-old carrier’s SAS Scandinavia subsidiary last week said they would agree to limited wage cuts and less favourable terms, but SAS said the concessions offered were not enough for it to carry out a rescue plan announced in February. read more
Unions also demand that pilots axed during the pandemic are rehired at SAS Scandinavia rather than having to compete with external applicants for jobs on less attractive terms at recently created SAS Link and Ireland-based SAS Connect.
On Saturday a mediator said the parties had made progress, but significant issues had yet to be resolved. read more
The airline said on Thursday that the strike had caused 2,550 flight cancellations, affecting 270,000 passengers and costing it between $94 million and $123 million. The Swedish government has said it will provide no more cash.
For Sunday, 164 SAS flights, or 62% of those scheduled, were cancelled, according to flight-tracking platform FlightAware. Pilots at SAS Link and SAS Connect are not on strike.
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Reporting by Helena Soderpalm, Anna Ringstrom and Johan Ahlander,
Editing by David Goodman and Frank Jack Daniel
Our Standards: The Thomson Reuters Trust Principles.
Strike grounding roughly half of airline’s flights
STOCKHOLM, July 5 (Reuters) – Scandinavian airline SAS (SAS.ST) has filed for bankruptcy protection in the United States to help cut debt, it said on Tuesday, piling pressure on striking pilots it blames for deepening its financial woes and sending its shares down 10%.
Wage talks between SAS and its pilots collapsed on Monday, triggering a strike that adds to travel chaos across Europe as the peak summer travel season shifts into full gear.
Chief Executive Anko van der Werff said the strike had accelerated its decision to file for Chapter 11 status. But the negotiator for SAS’ Danish pilots said the scope of the filing showed it had been months in the making and called attempts to blame striking staff for triggering it “beneath contempt”.
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The airline, whose biggest owners are Swedish and Danish taxpayers, said that the strike would have “a negative impact on the liquidity and financial position of the company and, if prolonged, such impact could become material”.
The strike will cost it $10 million to $13 million per day, the company said in its court filing. Sydbank analysts estimated, in a worst-case scenario, it could erase up to half of its cash flow in the initial four to five weeks alone.
“The pilots may well consider themselves pieces in the puzzle that legalizes the management’s Chapter 11 request, and it’s doubtful whether it will bring them back to the negotiating table,” Sydbank analyst Jacob Pedersen said.
“On the other hand, the Chapter 11 request also shows how serious the situation is for SAS.”
Entering Chapter 11 would make it easier for the company to lay off employees, experts say.
Swedish Airline Pilots Association Chairman Martin Lindgren said his members had seen it as inevitable the airline would need to embark on a “reconstruction”.
“It does not affect the strike or our agreements,” he said.
The airline said the U.S. bankruptcy protection filing was aimed at accelerating a restructuring plan announced in February.
“SAS aims to reach agreements with key stakeholders, restructure the company’s debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection,” it said.
TALKS WITH LENDERS
View of SAS Airbus A321 and A320neo aircraft at Kastrup Airport parked on the tarmac, after pilots of Scandinavian Airlines went on strike, in Kastrup, Denmark July 4, 2022. TT News Agency/Johan Nilsson via REUTERS
SAS said discussions with lenders regarding another $700 million of financing were “well advanced”.
The strike is grounding roughly half the airline’s flights, affecting some 30,000 passengers per day, it said.
Data from flight tracking website FlightAware showed 232 SAS flights – 77% of those scheduled – had been cancelled on Tuesday, while Oslo’s Gardermoen airport, one of SAS’ hubs, had the world’s highest cancellation rate on the day.
SAS expects to complete the Chapter 11 process in nine to 12 months, it added. SAS shares can be traded as normal during the bankruptcy proceedings.
Wallenberg Investments, SAS’s third biggest shareholder with a 3.4% stake, said it supported the decision and would allow for talks to continue to make the airline competitive.
“For decades, SAS has had too-high costs and too-low productivity compared to its rivals,” it said.
SAS needs to attract new investors and has said to do that it must slash costs across the company, including for leased planes that stand idle because of closed Russian airspace and a slow recovery in Asia. read more
Its finance chief Erno Hilden said in the court filing the airline had so far been unable to renegotiate lease terms, many of which it said were “significantly above” market rates.
SAS had three bonds outstanding , , with a total face value of 5.4 billion Swedish crowns ($519 million). They now trade at deeply distressed levels of around one-third of face value.
The airline predicted its cash balance of 7.8 billion Swedish crowns was sufficient to meet its business obligations in the near term.
Sweden’s government has said no to injecting more cash into the carrier, while Copenhagen has said it may do so if SAS is able attract new investors.
Nordnet analyst Per Hansen said the U.S. application showed SAS needs a fresh start and that it thinks the strike will drag on. “Management and the board want to make it absolutely clear for all stakeholders that the situation is very serious.”
($1 = 10.3216 Swedish crowns)
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Additional reporting by Johan Ahlander in Stockholm, Essi Lehto in Helsinki, Victoria Klesty in Oslo, Agata Rybska in Gdansk, Jamie Freed in Sydney and Karin Strohecker in London; Writing by Niklas Pollard; Editing by Matt Scuffham, Jan Harvey and Emelia Sithole-Matarise
Our Standards: The Thomson Reuters Trust Principles.
Strike to ground roughly half of airline’s flights
SAS says will affect about 30,000 passengers per day
Strike raises uncertainty of loss-making airline’s future
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 future of the carrier at risk and adds to travel chaos across Europe as the peak summer vacation period begins.
The action is the first major airline strike to hit when the industry is seeking to capitalise on the first full rebound in leisure travel following the pandemic.
It follows months of acrimony between employees and management as the airline seeks to recover from the impact of lockdowns without taking on costs it believes would leave it unable to compete.
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At the same time, employees across Europe are demanding wage rises as they struggle with surging inflation.
A strike could cost SAS nearly 100 million Swedish crowns ($10 million) per day, Sydbank analyst Jacob Pedersen calculated, and the company’s future ticket sales will suffer. Shares in SAS were down 4.7% by 1511 GMT.
“A strike at this point is devastating for SAS and puts the company’s future together 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 demonstrates reckless behaviour from the pilots’ unions and a shockingly low understanding of the critical situation that SAS is in.”
Sydbank’s Pedersen said the strike could erase up to half of the airline’s cash flow of more than 8 billion crowns in the initial four-to-five weeks alone in a worst-case scenario, and was bound to leave “deep wounds” among affected travellers.
“SAS has too much debt and too high costs, and is thus not competitive. SAS is in other words a company flying toward bankruptcy,” he said in a research note.
TRADING BLAME
Union leaders blamed SAS.
“We have finally realised that SAS doesn’t want an agreement,” SAS Pilot Group chairman Martin Lindgren told reporters. “SAS wants a strike.”
Lindgren said the pilots were ready to resume talks, but called on SAS to change its stance.
The unions said nearly 1,000 pilots in Denmark, Sweden and Norway will join the strike, which is one of the biggest airline walkouts since British Airways pilots in 2019 grounded most of the carrier’s flights in a dispute over pay.
Further disruption looms as British Airways staff at London’s Heathrow airport in June voted to strike over pay. read more
Scandinavian Airlines (SAS) flights are seen listed at Copenhagen Airport Kastrup in Copenhagen, Denmark, July 3, 2022. REUTERS/Andrew Kelly
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In addition, Spanish-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 stopped work at the weekend to demand a pay rise. read more
Sofia Skedung, 38, arrived at Stockholm’s Arlanda airport to find the SAS flight she and her family were booked on for a charter trip was cancelled.
“I was going to go with my family to Corfu on holiday for a week, which we really had looked forward to since we haven’t travelled in a really long time,” she said as searched the departure hall in vain for SAS staff.
“Everything is very, very confused here,” she added.
BUSIEST WEEK
Loss-making SAS is seeking to restructure its business through large cost cuts, raising cash and converting debt to equity. read more
“This is all about finding investors. How on earth is a strike in the busiest week of the last 2.5 years helping find and attract investors?” van der Werff told reporters.
The airline, which is part-owned by the governments of Sweden and Denmark, estimated the strike would lead to the cancellation of around 50% of scheduled SAS flights and impact around 30,000 passengers per day, roughly half its daily load.
Denmark has said it is willing to provide more cash and write off debt on condition the airline brings in private investors as well, while Sweden has refused to inject more money.
Norway sold its stake in 2018, but holds debt in the airline, and has said it might be willing to convert that into equity. read more
Denmark’s Finance Minister Nicolai Wammen in an e-mailed 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’ decision to hire pilots through two new subsidiaries – Connect and Link – instead of first rehiring former employees dismissed 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 organises the 260 pilots attached to the two units. Neither would it affect SAS’ external partners Xfly, Cityjet and Airbaltic, the company has said.
SAS had already cancelled many flights ahead of the summer, part of a wider trend in Europe, where, in addition to the upheaval of strike action, operators have responded to staff shortages created by slow rehiring after the pandemic.
($1 = 10.3436 Swedish crowns)
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Additional reporting by Stine Jacobsen in Copenhagen and Alex Cornwall in Dubai; writing by Niklas Pollard; editing by Barbara Lewis and Emelia Sithole-Matarise
Our Standards: The Thomson Reuters Trust Principles.