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Tuesday, June 25, 2024

SAS faces losses and more angry pilots

Scandinavian Airlines (SAS) reported more heavy losses on Tuesday, just as more of its laid-off pilots in Norway threatened lawsuits. They’re angry over SAS’ failure to re-hire them as the Corona crisis recedes, while SAS needs to ward off its own post-Corona crisis and must cut costs.

SAS has long served the Scandinavian market. New management argues that Corona has changed the entire market and SAS must change with it. PHOTO: SAS

It may all result in Scandinavian Airlines not being so Scandinavian any longer. New subsidiaries have been set up abroad and can allow SAS to hire cheaper non-Scandinavian crew, both in the cockpit and on board. After two years of lost business that’s slow to return, the airline is launching a restructuring that’s clearly challenging its employees.

“We’ve been cheated by SAS,” claimed the leader of one of SAS’ Norwegian pilots’ unions this week. Roger Klokset of Norske SAS-flygeres Forening further claimed that SAS has planned to “get rid of its Scandinavian employees,” setting up new subsidiaries “behind our backs” as a means of avoiding legal obligations to rehire those laid off and its employer responsibility in Norway.

Another labour organization representing SAS employees in Norway, Parat, threatened a similar lawsuit last fall. SAS’ new management, though, firmly denies it has broken any laws. It simply set up new companies in which pilots must reapply for their old jobs, often at lower pay and reduced benefits.

Meanwhile SAS, like most other airlines, continues to be plagued by large declines in passengers because of Corona-related issues. While Norway, Sweden and Denmark have mostly opened up again and dropped infection prevention measures that hindered or even halted travel, lots of restrictions remain in place around Europe and the rest of the world. Traffic has continued to decline, resulting in a loss of SEK 2.6 billion in the last three-months.

See SAS’ own financial report here (external link to SAS corporate website).

SAS and other airlines have had to cut flights, also because of a lack of crew now to operate them. SAS management is now planning a major restructuring of the airline’s operations that’s aimed to cut annual costs by SEK 7.5 billion,  transform the entire company and preserve liquidity.

Analysts weren’t surprised by the big losses and lower passenger counts. “We must not forget why SAS and other airlines are struggling now,” said Frode Steen, a professor at Norwegian business school NHH who follows the airline industry closely. “So much has been shut down and SAS chose to keep some flights running. That’s been very important for us who live in Scandinavia. The airline and travel industries have suffered the most during the pandemic. It has cost them a lot.”

Norwegians and others are starting to travel again, but now the airlines also face high fuel costs because of international conflicts that have sent oil and gas prices soaring. Not only has Russian military aggression against Ukraine prompted SAS and other airlines to drop flights to Kiev, it’s also prompted concerns about the safety of airspace over Ukraine.

Many would-be passengers are looking forward to eventually take off on holidays again, but the pandemic is not over and uncertainty remains. “The pandemic has changed the market,” SAS head of operations in Norway, Kjetil Håbjørg, told state broadcaster NRK on Tuesday. He said the airline has to make major changes in line with market changes. Berglund



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