SAS and its Norwegian, Danish, and Swedish pilot unions have reached an agreement that ends a 15-day long strike that crippled the airline and cost $200M+.
The airline has agreed to rehire all the 450 pilots laid-off/furloughed during the pandemic who have not yet been called back. SAS Link and SAS Connect pilots, two separate subsidiaries, will join the other three pilot unions under one collective agreement valid for the next five and a half years.
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Announcement from the airline:
SAS REACHES AGREEMENTS WITH SAS SCANDINAVIA PILOTS’ UNIONS, ENDING THE PILOT STRIKEJuly 19, 2022 03:20Regulatory information
After 15 days of strike, SAS and SAS Scandinavia pilots’ unions have concluded mediation. The parties have agreed on new 5.5-year collective bargaining agreements and flights operated by SAS Scandinavia will resume according to their regular traffic program as soon as possible.
Following a 15-day strike action, SAS and SAS Scandinavia pilots’ unions* have reached an agreement on new collective bargaining agreements and the pilot strike has ended.
“I am pleased to report that we now have come to an agreement with all four pilot unions for SAS Scandinavia and the strike has ended. Finally, we can resume normal operations and fly our customers on their much longed-for summer holidays. I deeply regret that so many of our passengers have been impacted by this strike,” said Anko van der Werff, President & CEO.
The 5.5-year agreements between SAS and the SAS Scandinavia pilots’ unions are a key element of SAS’ comprehensive business transformation plan SAS FORWARD, as they provide the stability and predictability required by potential investors.
The agreements include cost savings in line with the set targets in the SAS FORWARD plan relating to the pilots’ terms and conditions, taking SAS one important step closer to achieving its SAS FORWARD target of SEK 7.5 billion in annual cost savings.
In short, the agreements imply increased productivity for the SAS Scandinavia pilots and increased flexibility in seasonal production. The terms and conditions of the agreements also yield a lowered unit cost for the SAS Scandinavia pilots.
Additionally, as part of the agreement between SAS and SAS Scandinavia pilots’ unions, a number of pending litigation previously initiated by the pilots’ unions and/or individual pilots against SAS will be withdrawn. In accordance with a restructuring support agreement to be entered into between the parties in the chapter 11 process, SAS has granted the unions a general unsecured pre-petition claim for the pilots in the amount of SEK 1.0 bn in SAS voluntary financial restructuring process. Distributions under that unsecured claim will be capped at SEK 100 million and made over 5.5 years, corresponding to the term of the agreements.
Finally, SAS has committed to the rehire, and subsequent full-time employment, of 450 pilots in tandem with the ramp-up of flight operations until 2024.
With these labor agreements in place, SAS will now be able to proceed with its process to secure funding to support the company’s on-going operations – which it expects to finalize within the next few weeks – throughout its voluntary financial restructuring process.
“With these agreements in place, the pilots are doing their part in this difficult situation. We now get on with the important work of progressing our transformation plan SAS FORWARD and building a strong and competitive SAS for generations to come, with the support of our pilots’ unions and all other stakeholders. The strike has been a tough situation for our customers, for our employees, and for our company as a whole. I would like to extend my sincere gratitude to all of my SAS colleagues who have worked tirelessly these past weeks to help our customers,” Anko van der Werff concludes.
The agreements between SAS and the SAS Scandinavia pilots’ unions are subject to approval by the members of all four unions and, as SAS is currently undergoing a voluntary financial restructuring in the U.S., the final agreements are also subject to approval by a U.S. federal court. The company expects to receive the necessary approvals within the next few weeks.
As previously announced, the estimated effect of the strike is approximately SEK 100-130 million per day (US$9.5-$12.5 million) in lost revenue and costs. To date, the financial impact of the strike is expected to exceed SEK 1.5 billion (US$145 million). It is too early to provide more specific information about the total financial impact of the strike, but after 15 days of strike action approximately 380,000 passengers have been affected by approximately 3,700 canceled flights.
SAS has been in trouble before and recently filed for Chapter 11 bankruptcy protection in the United States (read more here) to renegotiate existing agreements while seeking extra capital from current and possible new owners.
Norwegian and Swedish states have only agreed to convert existing debt to equity, while Denmark has, in principle, been open to capital injection.
I believe that the main problem with the SAS is that it has too many competing interests (three countries) with main hubs very close to each other. Therefore, I doubt that these minor changes will ensure the long-term survival of the airline.