By Nikolaj Skydsgaard and Jamie Freed
COPENHAGEN/STOCKHOLM (Reuters) -SAS and pilot unions have reached a wage deal, the Scandinavian airline confirmed on Tuesday, ending a 15-day strike over a new collective bargaining agreement that had grounded 3,700 flights and put the carrier's future in doubt.
Shares in SAS jumped 12% in early morning trade, but then steadied and were up around 4% at 1223 GMT. They are still down about 40% since the beginning of the year.
The airline, which filed for U.S. bankruptcy protection on the second day of the strike, said the industrial action had cost it more than $145 million to date and affected 380,000 passengers in the peak summer travel season.
The deal will allow the airline to finalise plans in the next few weeks to raise $700 million of fresh financing needed to see it through the bankruptcy protection process, it said.
"The agreement we've made is what you could call an appetizing investment case," SAS Chairman Carsten Dilling told Danish broadcaster TV 2, adding that landing a long-term agreement had been "crucial" for SAS.
The airline said the new 5-1/2-year deal with four pilot unions would help it achieve part of the $700 million of annual cost savings set out in a business transformation plan, known as SAS FORWARD, that also includes measures such as handing back unwanted planes to lessors.
SAS still needs to "find a couple of hundred million" in annual cost savings to reach its target, Dilling said.
Even before the pandemic hit, SAS, which has branded itself as a premium airline, was losing money amid rising competition from low-cost carriers.
"I have good hope that they find the position in the market for the future, as a quality airline," investor Gerald Engstrom, who has a 0.96% stake in SAS, told Reuters.
"Because SAS cannot be the cheapest, not even with those improvements. So they need to find a type of Lufthansa, British Airways style of doing this."
Wallenberg Investments, SAS's third-biggest shareholder with a 3.4% stake, said it viewed the agreement positively as did government ministers in Denmark and Sweden, with both governments each holding a 21.8% stake in the airline.
Danish Finance Minister Nicolai Wammen told Reuters all parties involved now needed to "make adequate contributions" as SAS implemented its transformation plan.
Denmark has pledged to write off some of SAS' debt and convert some more into equity, as well as to inject new cash, if private investors participate too. Sweden backs a debt conversion but says no to injecting more cash.