Scandinavian Airlines (SAS) could finally report some much better financial results this week, but the long-struggling carrier and its passengers still face massive disruption next week. SAS’ Danish and Norwegian pilots aren’t backing down on their demands for pay raises, more time off and, it’s claimed, more influence over how the airline is run.
SAS’ good news of strong and badly needed third-quarter profits on Tuesday sent its share price soaring as much as 8 percent at one point. The airline’s pre-tax profit of SEK 1.9 billion was 85 percent higher than last year’s and attributed to more passengers, higher sales of extra services, cost cuts and a weaker US dollar. It was much higher than analysts had expected and an indication that SAS may finally be on the right course after years of struggling against low-fare carriers that have enjoyed much lower overhead and personnel costs than SAS.
The good news from the airline was quickly overshadowed, however, by an ongoing strike threat from disgruntled pilots in Norway and Denmark. While SAS’ Swedish pilots accepted a new three-year agreement last week, newspaper Dagens Næringsliv (DN) reported on Wednesday that their Danish and Norwegian colleagues have not accepted the same offer from management. It includes pay hikes in line with other major unions in Sweden, according to CEO Rickard Gustafson, and, most importantly, some protection for pilots who feel threatened by SAS’ establishment of bases abroad that can operate flights at lower costs. One agreement limits SAS’ so-called “wet leases” of aircraft with cheaper crews from abroad. The other special agreement, also a concession to the pilots, restricts traffic to and from Scandinavia to SAS’ own aircraft with “SK” flight numbers and using Scandinavian crews.
Norwegians and Danes want more
The two special agreements regulate how SAS can use the controversial new foreign bases that it intends to start operating in November. The bases are set up to lower costs and make SAS more competitive against low-fare and arguably lower-service airlines like Ryanair and Norwegian Air. They already use foreign bases where costs are lower than in Scandinavia for both crewing and aircraft operations.
The Norwegian and Danish pilots remain strongly opposed to SAS’ looming base openings at London Heathrow and Malaga in Spain, but have no right to negotiate over them or SAS’ establishment of an Irish subsidiary to run them. That responsibility and control “lies with the board and the management,” Gustafson told DN. “That’s just the way it is.”
The Norwegian and Danish pilots have acknowledged that control of the bases is not included in their collective bargaining agreements with SAS, but they’ve protested mightily and claimed recently that the bases “are stealing our jobs.” Now they’re making other expensive demands. Many already earn around or even more than NOK 1 million a year and have more control and better deals than their counterparts at rival Norwegian Air, but now they want pay raises of 3.5 percent, more flexible work time and at least every other weekend off.
Gustafson told DN that the pilots’ demands, if granted, will raise SAS’ costs by 20 percent in Denmark and 25 percent in Norway. “We can’t accept that,” he said. “It’s around 10 times more than the norm and what we’ve agreed upon with their other SAS colleagues.”
If the two sides don’t settle their differences through mediation this weekend, the pilots threaten to go on strike from Monday morning.
Passengers stand to suffer the most
Jens Lippestad, leader of negotiations for one of the two Norwegian pilots’ unions, wouldn’t comment, saying that Gustafson must stand for his own calculations. “Our demands are for a worklife that’s compatible with family life,” Lippestad told DN. “If that costs 25 percent extra, so be it.” Jan Levi Skogvang of the other union, SAS Norge Pilotforening, wouldn’t comment either, saying only that the pilots will head into the mediation that runs through the weekend “with the hope that we’ll come to agreement.”
DN commentator Eva Grinde wrote on Wednesday that sympathy for the SAS pilots in Norway and Denmark remains questionable given the relatively high pay, time off and special agreements that they already have. Grinde noted that the SAS pilots remain far better off than Norwegian Air pilots who went out on a strike two years ago that left everyone unhappy and ended without any winners.
SAS passengers, whose goodwill and support should be important for both the pilots and their bosses, are arguably the ones facing the most uncertainty and anxiety. Those scheduled to travel on SAS flights next week stand to suffer the most from cancelled or delayed flights caused by a strike, as the so-called “innocent third party” caught in yet another conflict between management and employees.