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SAS says time running out as pilot strike enters third week
Global Banking & Finance Review®
Company
By Anna Ringstrom and Jacob Gronholt-Pedersen
STOCKHOLM (Reuters) -SAS warned on Monday that time was running out as negotiations resumed with pilot unions to end a two-week strike that the Scandinavian airline says threatens its existence.
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 on July 13.
The lead negotiator for SAS said that time was running out and that Monday could be the final day of talks between SAS management and unions.
“We are approaching a point where, as lead negotiator, I have to admit that now we can’t go any further,” Marianne Hernaes told reporters as she arrived at the talks on Monday.
“We are soon at the end of the road … Money is flowing out of the company … So some decisions have to be taken,” she said, without giving specifics.
Still, unions expressed hope a solution could be found. The optimism was also reflected in gains in SAS’ share price.
“I hope it will get solved,” Jan Levi Skogvang, one of the union officials representing SAS pilots, told reporters.
Shares in SAS were up 18.7% at 1059 GMT and were headed for their biggest daily gain in almost 20 months as talks continued, though the stock is down nearly 70% over the past year.
The airline filed for U.S. bankruptcy protection on July 5, but its CEO Anko van der Werff said last week that the strike was putting the success of that process and, ultimately, the survival of the company at stake.
Negotiations had continued through the weekend in a marathon 33-hour session without breaks, but significant issues had yet to be resolved.
Long-struggling SAS needs to attract new investors and secure bridge financing, saying it must first slash costs to achieve those objectives.
The strike is costing SAS $10 million to $13 million per day, according to the airline. Sydbank analyst Jacob Pedersen estimates that if the strike continues, the airline will have lost up to 5 billion Swedish crowns ($481 million) in cash flow by the end of July, or more than half of its liquidity.
“The risk of bankruptcy should have been eliminated with the U.S. bankruptcy protection filing,” said Pedersen. “But as the strike continues, the investors that were lined up to provide bridge financing are having second thoughts.”
Pilots employed by the 75-year-old carrier’s SAS Scandinaviasubsidiary said after talks collapsed that they would agree to limited wage cuts and less favourable terms, while SAS said the concessions offered were not enough for it to carry out a rescue plan announced in February.
Unions also demand that pilots axed during the COVID-19 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 Monday, 200 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.
($1 = 10.3913 Swedish crowns)
(Reporting by Anna Ringstrom and Jacob Gronholt-Pedersen; writing by Anna Ringstrom, Gwladys Fouche and Jacob Gronholt-Pedersen; editing by Muralikumar Anantharaman, David Goodman and Emelia Sithole-Matarise)
Bankruptcy protection is a legal status for individuals or businesses that cannot repay their debts, allowing them to reorganize or eliminate debts under court supervision.
A rescue plan is a strategy implemented by a company to recover from financial distress, often involving cost-cutting measures, restructuring, or seeking new investments.
Liquidity refers to the availability of cash or assets that can be quickly converted to cash to meet short-term financial obligations.
Pilot unions are organizations that represent the interests of pilots, negotiating contracts, wages, and working conditions on their behalf.
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