SAS’s future depends on a new ownership culture

Charlie Taylor

It was not until dawn on Tuesday that the official announcement came that the pilot strike at SAS was over. It was not a second too early. The strike has from the start 15 days ago appeared unreasonable and hopeless. To strike in the middle of the hottest holiday season, the first summer after a two-year Covid stop, when the employer is on the verge of bankruptcy, there is war in Europe and fuel prices are rising is not a particularly good idea.Published: July 19, 2022, 7:30 p.m.CEO Anko van der Werff has rightly complained about the company’s unreasonable and infamous strike culture. The pilot strike is said to have cost around SEK 100 million a day, and similar strikes have characterized SAS ever since European aviation began to be deregulated in 1993 and low-cost flights took off. In the years 1998 to 2015, the researcher Hans Sjögren in the book Högtryck: SAS and the transformation could count to 176 pieces. As many as 146 of these were illegal, 137 of them took place in Denmark. But the strike culture is certainly not SAS’s only problem. Director van der Werff can just as easily get angry about SAS’s ownership culture. The strike culture is associated with at least as strange ownership, probably the most complicated and strange in the entire industry. But the CEO can of course not emphasize, the owners are his employer. SAS was started by three countries and the Wallenberg family, that is, old, powerful Marcus Wallenberg, to keep large export companies with routes out into the world, mostly Swedish. With so many owners from the beginning it was open to rivalry and quarrels, but as long as aviation was regulated, the gnawing was mostly about locations and personal positions of power. European deregulation in the early 1990s changed everything. Suddenly, the most important thing was to save and cut back, and to negotiate with proud and constantly disappointed employees. In that process, ownership with three states and a family dynasty became a heavy black on the foot. State owners are notoriously unsuitable for cutting costs, as they almost always take political considerations into account. With three different states involved, it got worse, and also very many unions. There are probably as many as 37 today. That is why the change in SAS has always been too slow. The ownership and strike cultures have mirrored and inhibited each other when the crises came one after the other, one worse than the other. Angry Norwegian pilots demanded a few weeks ago a Scandinavian labor market model, implicitly a more considerate and long-term one than the one in which low-cost companies live. But there is no room for any Scandinavian model when the competition is totally international, whether in terms of working or ownership conditions. Despite the fact that SAS’s staff has decreased from 40,000 to 5,000 since the beginning of the 1990s, low-cost flights have continued to eat their way in. Today, it is as natural for most people to book EasyJet or Wizz Air as Scandinavian SAS. Only now, with the pandemic and the worst crisis so far, does the enchantment finally seem to break. The Swedish state has said that they do not want to go into the new share issue and refinancing plan that the SAS management presented last winter, SAS Forward, with money. The Norwegian is already out of the picture. Only the Danish state, which has Kastrup in mind because the airport is one of the country’s largest employers, can consider investing, but only a part. ownership culture. The pilots have promised not to strike for five and a half years, at best it is enough to convince new owners that the strike culture has changed. Now negotiations remain with lenders and leasing companies on better terms, not least in the US Chapter 11, a method that has worked for many other airlines, including Norwegian, which has lost a lot of weight. SAS says that the negotiations will be completed within the coming weeks. The costs must go down. Predicting the future of SAS is as difficult to answer as whether there will be a deep recession or when Russia’s war against Ukraine ends. Business travel seems to have declined for good, due to the pandemic. And climate change can significantly affect travel habits. This is something that new owners and SAS’s balance sheet must take into account, compared with competitors. Only then can the long defensive be over.

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