SAS Strike Ends But Airline’s Troubles Are Far From Over

The 15-day Scandinavian Airlines (SAS) pilots’ strike that saw the cancellation of more than 3,000 flights has come to an end following several days of intense mediation. The airline, which is operating under voluntary Chapter 11 bankruptcy protection, will now return to normal operations in the coming days.

However, the future for SAS remains very much in the balance, with the airline openly admitting the risk of having to radically scale down operations in order to stay in business.

Strike disruption to continue

More than 350,000 passengers were impacted by the pilots’ strike that lasted more than two weeks.

However, there will still be disruption in the coming days as pilots, crews and planes return to service. “As aircraft and crew will be in different places, it will take a couple of days to be in full operation again,” said Tonje Sund, press manager at SAS Norway, to NRK.

She added that “a lot will happen” within the 24 hours following an agreement to end the strike, but aviation analyst Espen Andersen believed it would likely take 72 hours for SAS to resume its full schedule.

A new collective agreement

It had been widely reported that although pilots’ unions agreed to substantial cost savings, SAS wanted to lock in the collective agreement for at least six years. The typical length of a collective agreement in Scandinavia is two years, with three in some circumstances.

Pilots’ unions accepted an unprecedented five year term in order to end the strike. Several hundred former SAS pilots who were laid off during the pandemic will be offered their jobs back with seniority restored, a key victory for the pilots’ unions.

A financial crisis

SAS was already struggling for cash prior to the strike, but the disruption of the past weeks will pile more pressure on the airline’s finances. In a stock exchange message, the airline estimated the cost of the strike at approximately $10 million per day.

Renegotiation of collective agreements and the reorganisation of the company including the new subsidiaries SAS Connect and SAS Link are key components of the rescue plan known as SAS Forward.

Just a day after the strike began, SAS announced it had applied for so-called Chapter 11 bankruptcy protection in the U.S. courts. It now seeks to raise up to $700 million additional debtor-in-possession (DIP) financing in order to complete its restructuring while under Chapter 11 protection.

Prior to the end of the strike, SAS revealed that it might be forced to sell “valuable strategic assets” and “radically scale down its operation and fleet” if the industrial action were to continue much longer. While the strike came to an end just a few days after the report, it does show the precarious position the airline finds itself in.

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