Ongoing pilot strike sets stage for 2019 loss: SAS chairman

Copenhagen

SAS AB may be facing a loss in 2019 as the airline company weighs up the cost of a protracted pilot strike.

The walkout, which has already disrupted the plans of hundreds of thousands of passengers, continued into Wednesday, with SAS saying it has been forced to cancel another 504 departures across Scandinavia. Talks between the two sides appear to have reached a stalemate.

SAS chairman Carsten Dilling says it is too early to estimate the full cost of the strike, but told Jyllands-Posten that investors need to brace for the possibility that the company will not be generating a profit this year.

SAS has tried to curb the fallout by sending layoff notices to Norwegian cabin crew, but labour laws prevent it from doing the same in Denmark and Sweden, Jyllands-Posten reported.

Shares in SAS fell about 4.3 per cent in Stockholm on Tuesday, ahead of the May 1 holiday. Savings adviser Nordnet estimated on Monday that analysts tracking SAS were probably going to have to cut their average expectations for earnings per share by about 30 per cent. At DNB, analysts cut their rating on the stock to hold from buy because of the strike.

The standoff underscores the challenges facing airlines as they try to cut costs amid competition from discount rivals against a backdrop of overcapacity across Europe. The Nordic region has become a particularly tough battleground, with Iceland's Wow Air and leisure carrier Primera Air going out of business and Norwegian Air Shuttle ASA scrapping routes and delaying jet orders to help ease its debt burden.

Since starting late last week, the strike already looks set to cause well over 3,000 cancellations, affecting about 330,000 passengers.

In a statement on Tuesday, Rickard Gustafson, chief executive officer of SAS, said he was "deeply concerned that the pilot strike hasn't been resolved and that it is continuing to affect our customers".

"The demands made by the pilots' unions entail significant cost increases for SAS that would threaten the company's long-term competitiveness and consequently, the jobs of all SAS's employees," he said. For now, the talks "remain in a deadlock", he added. BLOOMBERG