Danish government announces plan to increase share in airline SAS

The Danish government has an agreement with a parliamentary majority to retain and potentially increase the share of airline SAS owned by the Danish state.

Scandinavian Airlines (SAS) Airbus A320 planes parked at Copenhagen Airport
Scandinavian Airlines (SAS) Airbus A320 planes parked at Copenhagen Airport in March 2020. File photo: Tt News Agency/Reuters/Ritzau Scanpix

The government and other parties envisage a share of between 22 and 30 percent in the financially struggling airline, Finance Minister Nicolai Wammen said at a press briefing on Friday.

“SAS is in a difficult situation. We have had to address how we react to it in Denmark,” Wammen said.

“The company is important to Danish society,” he said.

Wammen’s comments come after Sweden, which also owns part of SAS, said on Tuesday that Stockholm will not bail out the company amid its ongoing debt struggles, adding that the Swedish state will be reducing its stake in the airline.

The crisis-hit carrier also faces potential strikes by as many as 1,000 pilots by the end of June after negotiations with trade unions broke down.  

READ ALSO: Over 1,000 SAS pilots could go on strike by late June

Denmark currently owns 21.8 percent of SAS, the same share as Sweden.

The government is prepared to convert debt owed to it by SAS, worth 3.5 billion kroner, into shares.

The Norwegian government, which sold its share in the company in 2018, was reported earlier this week to be considering a similar move.

Wammen meanwhile stated that SAS cannot expect a cash injection from the Danish state immediately. Other investors must first be secured before Copenhagen is prepared to increase its financial backing.

“Our basis for exactly where we place ourselves on ownership share will be that we get a share that is suitably robust so that we could make a new agreement, with a new major shareholder in SAS, that protects Danish interests,” he said.

If SAS is unable to convince the market that it has a viable future, the company will receive no investment, either from the market or the Danish state, Conservative financial spokesperson Rasmus Jarlov said during the briefing.

“Of course we don’t want to pour money into a company that isn’t profitable,” Jarlov said.

The government is backed by a mixture of right- and left-wing parties in its tentative plans to back SAS. Those parties are the Liberal (Venstre), Conservative, Social Liberal, Socialist People’s and Danish People’s parties.

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SAS pilots approve new collective agreement

93 percent of Danish SAS pilots have approved the agreement that ended strike action last month.

SAS pilots approve new collective agreement

93 percent of the Danish SAS pilots have voted yes to an agreement which ended strike action but also means, among other things, redeployments, longer working weeks and lower wages.

This was announced by Dansk Metal on Saturday morning. The pilots could have voted yes or no on the new collective agreement until midnight on Friday evening.

Pilots in Sweden and Norway have also approved the agreement.

Keld Bækkelund Hansen, head of negotiations at Dansk Metal, said “I am incredibly happy. It is a bit atypical to see that a collective agreement negotiation ends in agreements being made that reduce wages and conditions.”

“So of course it was exciting how our members viewed the new collective agreement. But they could also see that it was a necessity in relation to SAS’s situation,” he added.

The agreement comes after months of tug-of-war that finally saw SAS and the striking pilots reach a collective agreement on 19 July. It helped end a two-week strike.

Part of the background to the conflict between SAS and the pilots was that, during the COVID-19 pandemic, SAS dismissed around half of its pilots.

With the new collective agreement, however, all 450 dismissed pilots will be offered re-employment in the future.

At the same time, SAS pilots will see a 25 percent pay cut, and the limit for the workload is raised from 47 hours to 60 hours per week.

But even with strike action over and a collective agreement supported by pilots, the problems are far from over for SAS, which has suffered major financial losses during the conflict.

Currently, the airline plans to begin a reconstruction in the United States under bankruptcy protection in a so-called Chapter 11 process.

Bankruptcy protection will mean that SAS can continue to operate and pay wages while the process is ongoing.

SAS is seeking financing of up to $700 million- slightly more than DKK 5.1 billion.

SAS press manager Alexandra Lindgren Kaoukji said in a statement: “We are very happy and look forward to continuing our ongoing Chapter 11 process and our work to ensure a strong and sustainable airline for many years to come.The positive result of the vote will help SAS to attract long-term investors while we go through the Chapter 11 process and work further with the SAS Forward plan.”