Amid financial difficulties and a massive pilot strike, Scandinavian airline SAS announced on Tuesday that it had filed for so-called Chapter 11 bankruptcy as part of a restructuring plan in the United States.
“We just have to do a lot more and do it a lot faster,” SAS chairman Carsten Dilling said at a news conference where he defended what he called “a well-considered decision.”
In the United States, Chapter 11 is a mechanism that allows a company to restructure its debt under court supervision while continuing to operate.
The move was taken to “proceed with the implementation of key elements” of its business transformation plan, the troubled airline, which employs nearly 7,000 people, said in a statement.
When asked why the company wanted to start the process in the US and not Sweden, where it is headquartered, Dilling said they considered several countries where they could file an application, but “ended up have concluded that the US framework is the right one for the company”.
Chief Executive Anko van der Werff said they expect to “complete the Chapter 11 process in nine to 12 months.”
SAS said its “operations and flight schedule were unaffected by the Chapter 11 filing and SAS will continue to serve its customers as usual,” but noted that the ongoing Scandinavian pilot union strike would continue to affect operations.
– ‘Last thing SAS needs’ –
“A strike is the last thing the company needs right now,” van der Werff told reporters.
The pilots left the company on Monday after negotiations between the unions and the company broke down.
The pilots are protesting pay cuts management is demanding as part of a restructuring plan aimed at ensuring the survival of the company, which has suffered a string of losses since the coronavirus pandemic began in early 2020.
On Monday, SAS said the strike “is expected to result in the cancellation of about 50 percent of all scheduled SAS flights,” affecting about 30,000 passengers daily.
SAS management announced in February the 7.5 billion Swedish kroner (US$700 million) cost-cutting plan called ‘SAS Forward’, which was followed in June by a plan to raise capital by nearly 1 billion euros (US$1 billion). 04 billion US dollars) was added.
The largest shareholders are Denmark and Sweden, each with 21.8 percent.
Denmark said in June it was ready to increase its stake to 30 percent. Sweden has refused to provide fresh funds but is ready to convert debt into capital.
Norway, which left SAS in 2018, has said it is ready to return to the airline, but only by converting debt into equity.
SAS, like the rest of the sector, suffered the effects of Covid-19 and cut 5,000 jobs or 40 percent of its workforce in 2020. The airline now had around 6,900 employees at the end of May, a number that fell below 5,000 at the height of the pandemic.
Shares of SAS, already at all-time lows, fell more than 11 percent in the early hours of trading on the Stockholm Stock Exchange.
SAS’ troubles come as the summer is proving difficult for European airlines and airports as staff shortages affect traffic.
Following widespread job losses linked to Covid-19, airlines and airports in many countries are struggling to hire new staff.
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