The airline SAS says that there is a risk to the survival of the pilots when the strikes are based on the flights

STOCKHOLM, July 4 (Reuters) – Wage talks between Scandinavian airline SAS (SAS.ST) and its pilots broke up on Monday, sparking a strike that put the carrier’s future at risk and added to travel chaos in Europe as the peak summer holiday season begins.

It’s the first major airline strike, as the industry looks to capitalize on the first full rebound in leisure travel since the pandemic.

It follows months of discontent between workers and management as the airline seeks to recover from the impact of the lockdowns without incurring costs it believes it cannot compete with.

At the same time, workers across Europe are demanding higher wages as they battle rising inflation.

Sydbank analyst Jacob Pedersen estimates that the strike could cost SAS about 100 million Swedish kroner ($10 million) a day, and the company’s future ticket sales would suffer. Shares in SAS were down 4.7% by 1511 GMT.

“A strike at this point is devastating for SAS and puts the future of the company and the jobs of thousands of colleagues at risk,” SAS chief executive Anko van der Werff said.

“The decision to strike now demonstrates the reckless behavior of the pilots’ union and the shockingly low level of criticality the SAS finds itself in.”

Sydbank’s Pedersen said in a worst-case scenario the strike could wipe out up to half of the airline’s cash flow of more than 8 billion kroner in the first four to five weeks alone, leaving “deep scars” among affected travelers. .

“SAS has a lot of debt and very high costs and is therefore not competitive. SAS, in other words, is a company that is flying towards bankruptcy,” he said.

TRADE SIN

Union leaders blamed the SAS.

Martin Lindgren, chairman of SAS Pilot Group, told reporters, “We finally understood that SAS did not want a deal.” “The SAS wants a strike.”

Lindgren said the pilots were ready to continue negotiations, but urged the SAS to change its position.

Unions said about 1,000 pilots in Denmark, Sweden and Norway would join the strike, one of the biggest since British Airways pilots grounded most of the carrier’s flights in 2019 in a pay dispute.

Further disruption comes as British Airways workers at London’s Heathrow airport vote to strike over pay in June. read more

Also, Spanish cabin crew on Ryanair (RYA.I) and easyJet (EZJ.L) It plans to strike this month to demand better working conditions, and workers at Paris’ Charles de Gaulle airport walked off the job over the weekend to demand a pay rise. read more

Sofia Skedung, 38, arrived at Stockholm’s Arlanda airport to discover that the SAS flight she had booked for a charter trip with her family had been cancelled.

“I was going to Corfu with my family for a week’s holiday, which we were really looking forward to as we hadn’t traveled in a long time,” she said. .

“It’s very, very confusing here,” he said.

MOST WORKING WEEK

Loss-making SAS is trying to restructure its business by cutting big costs, boosting cash flow and converting debt to equity. read more

“It’s about finding investors. How does a holiday during the busiest week of the last 2.5 years help find and attract investors?” van der Werff told reporters.

The airline, which is owned by the governments of Sweden and Denmark, estimated that the strike would cancel about 50% of scheduled SAS flights and affect about 30,000 passengers a day, about half the daily load.

Denmark has said it is willing to provide more cash and write off debt as long as the airline brings in private investors, while Sweden has refused to inject more money.

Norwegian sold its stake in 2018 but said it has debt in the airline and may be willing to convert it into equity. read more

Danish Finance Minister Nicolai Wammen said in an e-mailed statement to Reuters that he hopes the parties will find a solution as soon as possible.

The collective agreement between the airline and the SAS Pilot Group union expired on April 1. The negotiations, which started in November of last year, continued for months, and a new contract could not be concluded.

Pilots have been angered by SAS’ decision to hire pilots through two new subsidiaries, Connect and Link, instead of hiring ex-employees laid off during the pandemic, which has seen almost half of its pilots lose their jobs.

All pilots from parent company SAS Scandinavia will be involved in the strike, but not the Link and Connect union, which makes up 260 pilots across the two divisions. SAS’ foreign partners Xfly, Cityjet and Airbaltic will not be affected, the company said.

SAS had already canceled many flights ahead of the summer, part of a wider trend in Europe where, in addition to swings in strike action, operators have responded to staff shortages caused by slow rehiring since the pandemic.

($1 = 10.3436 Swedish kroner)

Additional reporting by Stine Jacobsen in Copenhagen and Alex Cornwall in Dubai; Writing by Niklas Pollard; Edited by Barbara Lewis and Emelia Sithole-Matarise

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