SAS locked in talks over pilots strike it says threatens its survival

By Johan Ahlander and Stine Jacobsen

STOCKHOLM (Reuters) -SAS said on Thursday a pilot strike now in its 11th day threatened the airline’s ability to access bridge financing without which it may be forced to radically downsize or could collapse.

SAS and unions were locked in more talks on Thursday to end a strike among most of its pilots at the peak of the holiday travel season, over conditions related to the Scandinavian carrier’s rescue plan.

“The strikes … threaten the company’s ability to ultimately successfully raise critically needed near-term and long-term capital to fund the company’s successful reorganisation,” SAS said in a statement.

“In such an event, the company will need to consider selling valuable strategic assets under duress while also radically downsizing SAS’s operations and fleet.”

Talks between SAS and pilot unions on Thursday were due to run until 2000 GMT at the latest, mediator Jan Sjolin said.

“We really hope that we will reach an agreement today. These are constructive talks,” he said.

The parties resumed collective bargaining talks on Wednesday after negotiations broke down on July 4.

SAS’ chief negotiator Marianne Hernaes around midday told reporters outside the venue it was hard to tell whether a deal would be reached on Thursday.

The carrier, whose main owners are the governments of Sweden and Denmark, cancelled 201 flights on Thursday, or 64% of those scheduled, according to FlightAware.

SAS said the strike so far had caused 2,550 flight cancellations, affecting 270,000 passengers, and cost it between $94 million and $123 million.

It has warned its limited cash reserves will erode quickly if the strike continues.

Long-struggling SAS, which needs to slash costs and attract new investors to survive, filed for U.S. bankruptcy protection on July 5.

“The strike is putting the success of the Chapter 11 process and, ultimately, the survival of the company at stake,” CEO Anko van der Werff said.

Pilots employed by SAS Scandinavia, a subsidiary of SAS Group, have said they would agree to limited wage cuts and less favourable terms but SAS said concessions so far are not enough for it to carry out a rescue plan announced in February.

Unions are also demanding that pilots who lost their jobs during the pandemic are rehired at SAS Scandinavia, rather than having to compete with external applicants for jobs with less attractive terms at newly started SAS Link and Ireland-based SAS Connect.

Danish mechanics, who had been striking in sympathy with pilots, said on Thursday they were ending their action, a move that means SAS planes in Copenhagen would be serviced and could get back in the air swiftly once a deal with pilots is reached.

Swedish mechanics have not gone on striking. Pilots employed by SAS Connect and SAS Link are also not on strike.

($1 = 10.6095 Swedish crowns)

(Reporting by Helena Soderpalm, Anna Ringstrom, Johan Ahlander and Stine Jacobsen; Writing by Anna Ringstrom; editing by Edmund Blair, Jason Neely and David Evans)