April 30, 2019
STOCKHOLM (Reuters) – DnB Markets lowered its rating on SAS as a pilot strike stretched into its fifth day with no resumption of talks in sight, sending the Scandinavian airline’s shares down on Tuesday.
Analysts at DnB Markets said the strike could cost SAS as much as 100 million Swedish crowns ($10.5 mln) a day.
SAS pilots went on strike on Friday after talks over wages and conditions broke down, grounding around 70 percent of the airline’s flights and affecting about 280,000 passengers through Tuesday.
DnB Markets lowered its rating on SAS shares to “hold” from “buy” after nearly halving its 2019 earnings per share estimate due to the strike and high fuel prices, and said it may cut estimates further unless the strike is ended by Wednesday.
Analysts said the 13 percent wage rise sought by pilots looked unrealistic in a period of high and rising fuel prices, intensifying competition and causing numerous airline bankruptcies.
“We believe investors will remain lukewarm as long as the earnings trend remains negative and as the pilots’ strike puts the targeted 3 billion crown cost savings by 2020 in jeopardy,” they said in a note.
SAS shares were down 2.4 percent at 0914 GMT, lagging the broader market in Stockholm and taking the drop since before the strike to over 9 percent.
“In 2016, a 5-day pilots’ strike in Sweden cost SAS around 150 million Norwegian crowns. However, this time the strike is across all three Scandinavian countries simultaneously,” analysts said.
SAS and unions said on Tuesday that the sides had not contacted each other since the start of the strike, and no new talks were scheduled.
(Reporting by Anna Ringstrom, editing by Ed Osmond)