After warning half its staff that layoffs were an option, SAS has today chosen to lay off 560 pilots citing reduced travel demand due to COVID-19 as the reason. However, pilot unions have criticized the move saying that the airline did not look at other options first and had no reason to lay off so many.
In April, SAS warned around 5,000 employees that potential layoffs would happen if the airline did not see demand rise soon. Flights to major Swedish airports dropped by 98% in May compared to the same month last year. The initial warning included layoffs of around 1,900 people in Sweden, 1,700 people in Denmark, and 1,300 based in Norway.
Now the warning is becoming a reality. However, despite many airlines having to layoff staff and despite SAS’ predictions, the Swedish Pilots Association thinks SAS could have handled the situation better.
Stay informed: Sign up for our daily aviation news digest.
A very unhappy union
The union pointed out that many of the pilots have notice periods as long as six months. In six months, the situation could look very different, and the union believes SAS is hasty in dismissing so many pilots at once.
SAS has already announced an increased summer schedule to European destinations. As it ramps back up, it will need pilots. The union has said the airline has no legitimate reason for laying off so many staff when its schedule is looking more positive.
SAS also has to consider the cost of hiring pilots at a later date when its schedule picks up again. Recalling or rehiring pilots requires expensive and time-consuming training, which is why some airlines have tried to offer furloughs and reduce hours to avoid these costs at a later date. Airlines have found it’s often cheaper to keep pilots and pay their salaries for a short time than lay them off and be forced to hire at a later date.
Pilots strike caused financial problems
But SAS has a rocky history with its pilots. Almost exactly a year ago, SAS pilots were on strike demanding higher pay and scheduling issues. After seven days of strikes and over 4,000 canceled flights, an agreement got the pilots back to work. However, the agreement required an immediate pay rise, with another 3% rise in 2020. SAS is already struggling, so it has no money to increase salaries and could be why they need to lay so many pilots off.
The strike also contributed to SAS’ vulnerable financial position. Experts estimate that the airline lost $50 million in revenues because of the strike. The airline barely avoided bankruptcy in 2012 and struggled for several years after, meaning it doesn’t have the cash reserves or assets that other airlines can draw on.
Over 90% of the airlines’ staff was furloughed in March in attempts to cut costs drastically, and a loan from the government helped tide the airline over. However, SAS is still struggling. The low demand for flights means they may need more help before a return to normality.
Do you think SAS needed to get rid of so many pilots? Or do you agree with the union? Let us know in the comments.