A day after the pilots’ strike began, the airline announced on Tuesday that it had filed for bankruptcy protection in the United States.
After a collective bargaining dispute with its pilots escalated, Scandinavian airline SAS pulled the ripcord with insolvency under US law. A day after the pilots’ strike began, the airline announced on Tuesday that it had filed for bankruptcy protection in the United States. The head of SAS, Anko van der Werf, said the shutdown precipitated the decision to take this step as it affected the company’s financial position and liquidity.
The aim of this measure is to advance the ongoing restructuring of SAS. The airline intends to continue its operations. Currently, it will have sufficient cash to continue operating. But if the pilots’ strike lasts longer, the situation changes. “We call on the SAS Scandinavian pilots’ union to end their strike and to engage constructively in this process,” van der Werf said.
Strike after KV collapsed negotiations
Collective bargaining between the Scandinavian airline and its pilots failed on Monday. The cockpit personnel immediately began to strike. According to the unions, nearly 1,000 aircraft operators in Denmark, Sweden and Norway would like to participate. According to SAS, about 30,000 passengers a day could be affected – in the middle of the post-pandemic summer travel boom, which is accompanied by huge start-up problems in flight operations across Europe.
A restructuring proceeding initiated pursuant to Chapter 11 (“Chapter 11”) of the US Bankruptcy Code protects the company from access to its creditors for a certain period of time – including obligations from employment contracts – and thus facilitates restructuring. US airlines often use this rule to get rid of debts or expensive leases. US law primarily protects the distressed company, while German insolvency law, for example, primarily protects creditors.
The process takes from nine to twelve months
The SAS also said the dismissal 11 process will take nine to 12 months. This operation serves to agree on debt restructuring with all stakeholders, to implement a significant capital increase and reorganization of the aircraft fleet. The airline, which is controlled by Sweden and Denmark, needs new financiers and wants to cut costs to become attractive to investors.
The governments of Sweden and Denmark, which each hold a 21.8 percent stake in SAS, have refused further financial injections after the coronavirus bailout. Jacob Pedersen, an analyst at Sydbank, said SAS is resorting to Chapter 11 because the airline was unable to negotiate a solution to the necessary changes. The whole thing has no effect on flight operations. “They’re trying to fix the engine at full speed.”
(APA)
