Airlines

Pilots Unions deal with SAS ends a 15-day strike

COPENHAGEN/STOCKHOLM, July 19, 2022;
Pilot unions have reached a wage deal, the Scandinavian airline confirmed, ending a 15-day strike over a new collective bargaining agreement that had grounded 3,700 flights and put the carrier’s future in doubt.

Shares in SAS jumped 12% in early morning trade, but then steadied and were up around 4% at 1223 GMT. They are still down about 40% since the beginning of the year.

The airline, which filed for U.S. bankruptcy protection on the second day of the strike, said the industrial action had cost it more than $145 million to date and affected 380,000 passengers in the peak summer travel season.
The deal will allow the airline to finalise plans in the next few weeks to raise $700 million of fresh financing needed to see it through the bankruptcy protection process, it said.

“The agreement we’ve made is what you could call an appetizing investment case,” SAS Chairman Carsten Dilling told Danish broadcaster TV 2, adding that landing a long-term agreement had been “crucial” for SAS.
The airline said the new 5-1/2-year deal with four pilot unions would help it achieve part of the $700 million of annual cost savings set out in a business transformation plan, known as SAS FORWARD, that also includes measures such as handing back unwanted planes to lessors.
SAS still needs to “find a couple of hundred million” in annual cost savings to reach its target, Dilling said.

Even before the pandemic hit, SAS, which has branded itself as a premium airline, was losing money amid rising competition from low-cost carriers.
“Because SAS cannot be the cheapest, not even with those improvements. So they need to find a type of Lufthansa, British Airways style of doing this.”

Wallenberg Investments, SAS’s third-biggest shareholder with a 3.4% stake, said it viewed the agreement positively as did government ministers in Denmark and Sweden, with both governments each holding a 21.8% stake in the airline.

Danish Finance Minister Nicolai Wammen said that all parties involved now needed to “make adequate contributions” as SAS implemented its transformation plan.

Denmark has pledged to write off some of SAS’ debt and convert some more into equity, as well as to inject new cash, if private investors participate too. Sweden backs a debt conversion but says no to injecting more cash.
The labour strife was the latest across Europe’s aviation sector as millions of workers struggle with rising costs of living, prompting trade unions to demand wage increases and stage walkouts, disrupting travel.

“Finally, we can resume normal operations and fly our customers on their much longed-for summer holidays,” SAS Chief Executive Anko van der Werff said in a statement.
Some flight disruptions will continue while the airline works to resume normal traffic, the company said. On Tuesday, about a third of SAS flights were cancelled, according to flight tracker website Flightaware.com.

SAS said the agreement with pilots involved higher productivity, increased flexibility in seasonal capacity and a commitment, as operations ramp up until 2024, to rehire 450 pilots laid off during the pandemic.
Pilots had agreed to around a 25% cut in wages and terms as well as up to 60 working hours per week, up from the current 47, chairman of the Danish pilot union, Henrik Thyregod, told Danish media.

SAS had also met a key demand from unions that the laid-off pilots shouldn’t have to compete with external applicants for jobs with less attractive terms at newly started subsidiaries SAS Link and Ireland-based SAS Connect, Swedish Air Line Pilots Association said in a statement.

The deal remained subject to approval by union members and a U.S. federal court, which is expected within a few weeks, SAS said.

SAS confirmed on Tuesday the new agreement would apply to Link and Connect pilots as well.
However, the Flight Personnel Union (FPU), which represents 180 pilots employed in the Link and Connect subsidiaries, said its pilots would stay on their current agreements until 2025 and 2027, respectively.
Danish union negotiator Keld Baekkelund said the new deal was a parallel agreement, and that SAS had pledged not to hire new pilots under the Link and Connect agreements and that those agreements would not be renewed.

Daniel Bakalangudde

Daniel Bakalangudde is an Associate Editor at The Aviator Africa with a special interest in all things Aviation.

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