Scandinavian Airlines (SAS) was able to avoid filing for bankruptcy on Monday after the last of nine key labour unions finally agreed to go along with pay and pension cuts, along with more demanding work rules. The agreement ended a weekend drama that some say put the entire Nordic transport system at stake.
Danish flight attendants were the last holdout, after their colleagues in Norway and Sweden had reluctantly followed the pilots’ unions and other labour organizations in accepting lower pay, poorer pensions and more hours on the job.
The Danes’ union CAU ended up signing a new deal with SAS just before 3pm. SAS’ top management and its board members were gathered at Kastrup Airport in Copenhagen on Monday afternoon to formalize the difficult process that was billed as the “last chance” SAS had to prevent permanent grounding.
Norwegian Broadcasting (NRK) reported that the agreement with the Danish flight attendants came nearly 15 hours after a Sunday deadline that had been extended to allow negotiations to continue through the night. It means SAS will keep flying and that its immediate crisis has been resolved.
Saving a once-proud industry pioneer
A bankruptcy for SAS, which has been a pioneer in polar flights and once set a standard for service as an “Airline of the Year,” would have been destructive for the entire Nordic market, claim aviation analysts like Einar Sørensen. He wrote on NRK’s website Monday that while some economists and stockbrokers have been quick to doom SAS in recent weeks, claiming that other players would quickly enter the market, Sørensen disagreed. He noted that SAS still carries half the flying public in Norway and that its absence would have left aviation authorities like Avinor with huge losses. That’s because SAS supplies as much as 70 percent of the operating budgets for all the major airports in Norway.
In addition to its airline passengers, SAS is an important carrier of mail and cargo along with being a major employer. In short, Sørensen argues that it was in the best interests of all Norwegians, along with Swedes and Danes, to keep SAS aloft. That helps explain why the governments of all three Scandinavian countries, which still own half of SAS’ shares, were keen for a rescue plan to succeed.
Other have noted that a grounding of SAS would also have left Norwegian Air with a monopoly on many routes within Norway and Scandinavia, never a good situation for consumers.
Slashing jobs and costs
SAS will now save around SEK 3 billion in costs, and stands to gain on planned sales of both Norwegian domestic carrier Widerøe and its SAS Ground Handling (SGH), which takes care of check-in services at airports and baggage handling.
Staff cuts are expected to reach as high as 6,000, with many coming from within administration, which will be consolidated in Stockholm. Only a few necessary local functions will be handled in Norway and Denmark.
Those cuts will affect many management officials, with top management also promising to take pay cuts of around 20 percent. Union members will likely see their pay cut by around 10 percent.
‘Home for Christmas’
Negotiations dragged on, and well beyond Sunday’s deadline, because union leaders say they initially refused to simply accept SAS’ opening terms. “We insisted on real negotiations,” Jens Lippestad, head of the Norwegian pilots’ association NSF, told NRK. Swedish pilots’ leader Robert Gustafsson said the pilots gave up a month’s worth of pay and in principle “met SAS on all points.”
The head of the flight attendants in Norway, Anneli Nyberg, said her members weren’t happy with their final agreement “but I don’t think SAS is either.” Millions of passengers, meanwhile, breathed a sigh of relief.
“Yippee, I’ll get home for Christmas,” wrote one passenger in an unusually active stream of messages on social media site Twitter Monday afternoon.
Views and News from Norway/Nina Berglund
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