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SAS Says Pilots Strike A Risk To Its Survival As Talks Resume

By Dave Simpson

SAS SAS.ST said on Thursday 14 July that 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.

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SAS and unions were locked in more talks on Thursday 14 July 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 .. threatens 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.

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"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 4 July.

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 14 July that 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.

SAS And Pilot Unions Unable To Reach Deal, Talks To Resume Thursday

The above news followed news that Scandinavian airline SAS SAS.ST and unions representing striking pilots were unable reach a collective bargaining agreement on Wednesday, with negotiations to resume on Thursday 14 July as a crippling strike will enter its 11th day.

The 75-year old carrier was struggling even before the pandemic hit in 2020 due to high costs and growing competition from low-cost carriers.

The pilots strike, which started on 4 July, cost $10 million to $13 million a day and forced SAS to cancel more 1,200 flights at the peak of the summer travel season.

"We have decided to stop tonight and we continue tomorrow," Roger Klokset from the union representing Norwegian SAS pilots, told Norwegian daily VG.

"I am not interpreting this as anything more than it takes the time it takes. As we said, these are big, complete problems we are discussing and this takes time," he added.

The carrier, whose main owners are the governments of Sweden and Denmark with stakes of 22% each, on Wednesday cancelled 242, or 75%, of scheduled flights, according to FlightAware.

"I can’t say what happens in the mediation but there is a reason why the parties have stayed as long as they have. We have been together for ten hours now," SAS negotiator Marianne Hernaes told Norwegian daily Dagens Naeringsliv. "I am hopeful that we can find a solution."

SAS last week filed for US bankruptcy protection seeking breathing space to restructure its business, saying the strike had hastened the filing.

The Swedish pilots union said last week that their latest bid included pilots taking a 5% pay cut, working more hours per week, working part-time in winter with a reduced salary and foregoing summer vacation.

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

In addition to affecting hundreds of thousands of travellers, the strike is putting stress on Northern Norway's health system as staff have not been able to fly in on time for some surgeries.

Norwegian authorities can stop a strike if they believe it poses an acute danger to life and health. On Tuesday 12 July, they said the strike did not pose such a risk.

SAS shares closed 9% higher on Wednesday 13 July but are down 48% this year.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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