SAS Files for Chapter 11 Protection in U.S.

 - July 5, 2022, 2:55 PM
An SAS Airbus A320 takes off from Manchester in the UK in 2016. (Photo: Flickr: Creative Commons (BY-SA) by Riik@mctr)

Scandinavian Airlines (SAS) filed for Chapter 11 bankruptcy protection in the U.S. a day after a strike by pilots stood to drastically affect its liquidity and financial position, the airline said Tuesday.

About 1,000 SAS pilots walked off the job on Monday in a move that SAS said demonstrates “reckless behavior” on the part of the pilots’ unions, just as airlines across Europe struggle with schedule disruptions during the busy summer travel season. SAS said the strike led to cancellations throughout the flight schedule and affected thousands of travelers.

Carrying a cash balance of some $780 million as of June 30, SAS said discussions with potential lenders have reached a “well advanced” stage. It seeks debtor-in-possession financing worth some $700 million to support operations through the court-supervised bankruptcy process.

SAS said it wants to continue mediation with pilot leaders in an effort to reach an agreement and end the strike “as soon as possible.” The airline received a notice of conflict from unions in Sweden, Norway, and Denmark on June 9 and began allowing customers to rebook flights free of charge on June 27.

The strike has led to the cancellation of about half of scheduled SAS flights, affecting some 30,000 passengers per day. The strike hasn’t affected flights operated by SAS Link, SAS Connect, and SAS’s external partners.

“A strike at this point is devastating for SAS and puts the company’s future together with the jobs of thousands of colleagues at stake,” said SAS president and CEO Anko van der Werff. “The decision to go on strike now demonstrates reckless behavior from the pilots’ unions and a shockingly low understanding of the critical situation that SAS is in.”

The decision to enter Chapter 11 protection comes during a restructuring process meant to cut costs and "rightsize" its service network to address losses incurred during the Covid pandemic. Pilots have complained that rather than recalling pilots laid off during the pandemic, SAS chose to hire lower-paid crews at new subsidiaries SAS Link and SAS Connect, based in Copenhagen.