Denmark agrees to invest in SAS as pilot strikes loom at the carrier
The Danish government and opposing political parties have agreed to invest in SAS as pilot strikes loom at the troubled Scandinavian carrier.
Under the cross-party agreement announced on June 10, 2022, Denmark will accept a write-down and conversion of its existing financial participation and invest new equity into SAS. However, the Danish state requires one or more new majority shareholders in order to ensure that its own shareholding remains a minority one.
“SAS is in a very serious situation,” Denmark’s finance minister Nicolai Wammen said in a statement. “With the agreement today, there is agreement that the state is willing to assume its share of the responsibility for restoring SAS, and that the state still wants to be a responsible and long-term co-owner of SAS for the benefit of Denmark's international accessibility, Danish exports and business as well as Danish workplaces.”
The announcement from Denmark comes after Sweden announced on June 7, 2022, that it would not be investing new capital into SAS, although it would convert existing debts into equity capital.
Meanwhile, on June 9, 2022, SAS pilots from Sweden, Denmark and Norway warned strikes were possible from June 29 in a row over pay and cost cuts.
“We have gone to great lengths to help SAS and we have offered the company huge savings. But we can under no circumstances agree to deteriorations (or wage cuts) of more than 30% which SAS demands,” Danish pilot union leader Henrik Thyregod said in a statement cited by the Reuters news agency.
SAS is currently trying to implement a restructuring plan, called SAS FORWARD, which it says is necessary to secure its future following the pandemic and amidst rising competition. Along with SEK 7.5 billion ($754 million) of cost cuts by 2026, the airline is aiming to restructure its fleet, plus convert some SEK20 billion ($2 billion) of debt and raise a minimum of SEK 9.5 billion ($953 million) in new funds.
However, the carrier warned on May 31, 2022, when it published its latest financial results, that it had made only limited progress in implementing the restructuring program and said it could resort to court action to help it implement measures, highlighting the need to reduce the number of long-haul aircraft it has in its fleet.
“If people are still aiming for or expecting that there will be a magical solution to the challenges that were faced with, I think they are wrong,” chief executive Anko van der Werff told analysts on an earnings call on May 31, 2022. “I get it if lessors do not want to consensually solve what is clearly the right way forward for us, then we will have to and we will look for those proper solutions in court.”
Strikes would come at a time when the airline, like others across Europe, has already cut flights this summer to try and counter operational challenges. All parts of the aviation industry, from airports to airlines and air traffic control, are struggling to rehire and restore capacity fast enough to meet demand after two years of the COVID-19 pandemic that grounded the industry.
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