By Nikolaj Skydsgaard and Jamie Freed
COPENHAGEN/STOCKHOLM (Reuters) – SAS and pilot unions have reached a pay deal, the Scandinavian airline confirmed on Tuesday, ending a 15-day strike over a new collective agreement that had blocked 3,700 flights and cast doubts the future of the carrier.
Shares of SAS jumped 12% in early morning trading, but then leveled off and rose around 4% at 12:23 GMT. They are still down about 40% since the start of the year.
The airline, which filed for bankruptcy protection in the United States on the second day of the strike, said the industrial action had cost it more than $145 million to date and affected 380,000 passengers during the high summer season.
The deal will allow the airline to finalize plans in the coming weeks to raise $700 million in new funding needed to complete the bankruptcy protection process, he said.
“The deal we have reached is what you might call an attractive investment case,” SAS chairman Carsten Dilling told Danish broadcaster TV 2, adding that securing a deal term had been “crucial” for SAS.
The airline said the new 5-and-a-half-year agreement with four pilots’ unions would help it achieve some of the $700 million in annual savings planned in a company transformation plan, known as of SAS FORWARD, which also includes measures such as the return of unwanted aircraft to lessors.
SAS still needs to “find a few hundred million” in annual savings to meet its goal, Dilling said.
Even before the pandemic hit, SAS, which billed itself as a premium airline, was losing money to growing competition from low-cost carriers.
“I’m hopeful they find the market position for the future, as a quality airline,” investor Gerald Engstrom, who owns a 0.96% stake in SAS, told Reuters. .
“Because SAS can’t be the cheapest, even with those upgrades. So they have to find a Lufthansa, British Airways-style guy to do that.”
Wallenberg Investments, SAS’s third-largest shareholder with a 3.4% stake, said it viewed the deal positively, as did government ministers in Denmark and Sweden, with the two governments each holding a stake of 21.8% in the airline.
Danish Finance Minister Nicolai Wammen told Reuters that all parties involved must now “make adequate contributions” as SAS implements its transformation plan.
Denmark has pledged to cancel some of SAS’s debt and convert more to equity, as well as inject new cash, if private investors also participate. Sweden supports a debt swap but says no to injecting more money.
The labor dispute was the latest in Europe’s aviation sector as millions of workers grapple with rising living costs, prompting unions to demand pay rises and stage walkouts , disrupting travel.
“At last, we can resume normal operations and transport our customers on their long-awaited summer holidays,” SAS Chief Executive Anko van der Werff said in a statement.
Some flight disruptions will continue while the airline works to resume normal traffic, the company said. As of Tuesday, around a third of SAS flights were canceled, according to flight tracking website Flightaware.com.
SAS said the agreement with the pilots entails increased productivity, increased seasonal capacity flexibility and a commitment, as operations ramp up through 2024, to rehire 450 pilots made redundant during the pandemic.
The pilots had agreed to a reduction of about 25% in wages and conditions as well as up to 60 hours of work per week, compared to the current 47, the president of the Danish pilots’ union, Henrik Thyregod, told Danish media.
SAS had also responded to a key union demand that dismissed pilots should not compete with external candidates for jobs on less attractive terms at newly created subsidiaries SAS Link and Ireland-based SAS Connect, the company said. ‘Swedish Airline Pilots Association in a statement.
The deal remains subject to approval by union members and a US federal court, which is expected within weeks, SAS said.
SAS confirmed on Tuesday that the new agreement would also apply to Link and Connect pilots.
However, the Flight Personnel Union (FPU), which represents 180 pilots employed at Link and Connect subsidiaries, said its pilots would remain on their current agreements until 2025 and 2027, respectively.
Danish union negotiator Keld Baekkelund said the new deal was a side deal and that SAS had pledged not to hire new pilots under the Link and Connect deals and that those deals would not be renewed.
(Reporting by Jamie Freed in Sydney, Nikolaj Skydsgaard in Copenhagen, Johan Ahlander in Stockholm and Marie Mannes and Agata Rybska in Gdansk; additional reporting by Akriti Sharma in Bengaluru; Editing by Bradley Perrett, Niklas Pollard, Muralikumar Anantharaman, Louise Heavens and Susan Fenton)
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