Dividends and SAS airline warns survival at stake as strike grounds flights

Every company on the planet says its people make the difference and whatever company you work for that is true. Each of us believes we make a difference at work in some way or another, else why we be there? Every company in the private sector and in the quasi public sector follows the same rules profits equals more revenues than expenses. If the company does not make a profit, depending on the size it is s hobby or needs to be subsidized by someone or government. In some industries, the government encourages or sets expectations of management to operate in a quasi public manner because it is good for the government, one of these industries is the airlines. All countries want an airline due the benefits it can and does bring in economic development, all functioning airports have economic development around them including people and freight logistics.

In an article by Anna Ringstrom and Essi Lehto of Reuters, the large Swedish airline or SAS is having potential financial problems. Similar to employees around the world, the pilots want more money in global inflation. Planes can not fly without pilots and they have a strong bargaining position.

On the other side is management, the employees and management are not working together. SAS chuef executive officer Anko van der Werff says a strike by the pilots would be devastating for the company and all the colleagues. Management wants to reduce costs, a Sydbank analyst Jacob Pedersen says a strike will cost SAS $12.4 million a day. On top of that the company has high debt, too high costs relative to the other airlines, and there is a pent up demand to travel outside the country.

SAS is owned by the governments of Sweden and Denmark. The government of Norway did own piece of the company but sold in 2018, however it does own bonds or debt. The country has said it could convert debt to equity which would help the long term debt problem.

The strike went on for 15 days which SAS said cost the company $145 million with a lost of 3,700 flights. The deal entails lower wages, longer hours for pilots and commitment by SAS to rehire laid off pilots.

Linking to dividend paying stocks, all companies depend on quasi public companies and have an interest in the companies surviving, how much of their tax dollars to help is a different issue. Whether the company is public or quasi public, the issue of making profits never goes away. It is easier to invest in profit making companies first and monitor if they make profits you can keep them or find alternatives.

There are more questions than answers, till the next time – to raising questions.


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