When can stranded passengers return to Denmark? What is happening in the negotiations between the pilots and SAS? Can any kind of time horizon be given for the current dispute? These and more were answered by aviation analyst and equity analysis director Jacob Pedersen at Sydbank for Danish Radio.
The two sides in the dispute (the striking pilots and SAS management) repeatedly broke off negotiations, claiming that the deadline for reaching an agreement with the pilots had been postponed. Ultimately, however, the situation escalated into a trial strike. The conflict between the pilots and SAS reached its peak last Monday when the pilots began a strike, temporarily halting formal negotiations.
But SAS announced in a press release on Monday that it wants to take the initiative to resume negotiations.
Question 1: What will happen to the negotiations?
- Contrary to initial impressions, negotiations have resumed. This is better than no negotiations at all. In such a process, there are always a few informal channels. But the official channels have stalled. In fact, they haven't spoken officially to each other in the past week. Until now, both sides have been waiting for the other to make contact and ask, "Shall we talk about this?" The fact that neither has done so yet suggests that neither wants to take responsibility for what has happened, which has affected the return of many Danes on summer vacation. Furthermore, when both sides appear in the media, it's important to remember that there are many tactics at play, and it's all about gaining public sympathy. SAS is trying to frame the situation as if its position is sound, as they demonstrated on Monday evening. Essentially, the conflict hasn't changed in nature since their last split. It stems from the fact that management laid off pilots during the pandemic and, instead of rehiring them, created two subsidiaries where contracts are cheaper – including those with Danish companies. This has clearly upset the SAS pilots. Otherwise, it comes down to the fact that management needs to cut pilots“ salaries and increase productivity in order for SAS to make savings.
Update: The Danish pilots' union confirmed on Tuesday morning that SAS and the pilots will return to the negotiating table on Wednesday.
Question 2: Is it possible to give a time horizon for the conflict?
- The pilots' strike is costing SAS. Every day the strike continues, the airline loses 70 million kroner, and as a company, this can't last forever. I expect a solution will be found very soon. But at the moment, negotiations seem to be at a complete standstill. So it could take a week or two before SAS is back flying at full capacity. The conflict isn't just about new agreements for the pilots; it's part of something bigger. The pilots are under pressure from cheaper agreements offered by SAS, and SAS has a plan for how the company will survive, which requires the pilots to agree to a number of changes to their working conditions.
Question 3: What are the chances for stranded travelers?
- Thousands of Danes on holiday remain stranded, and the outlook for them this summer is even worse than it would otherwise be, as virtually all airline seats are filled during the summer season in European airspace. Europeans' desire to travel is exceptionally high, and no airlines or airports have been able to prepare for it. The ongoing SAS strike could extend the holidays of between 12,000 and 30,000 Scandinavians who booked return flights on SAS, according to travel company Apollo.
Question 4: When pilots ignore passengers stuck on their booked flights, what does that say about conflict?
- First, the striking pilots offered to fly stranded passengers home, but a few days later they withdrew their offer. The pilots didn't believe SAS was handling the special flight agreement "in good faith," and I think both the pilots and SAS were handed a gift on a silver platter. There's a huge crisis in that Danish passengers can't get home. SAS should have been able to come together to do what it was originally created for: create good customer experiences. But it's back at a dead end because of "tactics and shouting at each other," and even that hasn't been possible. So, to me, the two sides are quite far apart. In any case, this helps to suggest that a solution can, to some extent, be reached through collective bargaining.
Question 5: Will SAS survive this?
- Is there really any future prospect for SAS at all? For the past several years, SAS has suffered significant losses, and in its most recent quarterly accounts, the company estimated that it might be difficult to reach its target for a major cost-cutting plan. The day after negotiations broke down and the pilots began their strike, it was announced that SAS had filed for bankruptcy protection in the USA. This means they are protected from going out of business for the next nine to twelve months. In addition to this legal protection, they are also raising enough money to survive unless the strike continues. In the short term, I am quite certain that SAS will continue flying, but even if you have entered into such bankruptcy protection, it is not bankruptcy protection forever.
