Jan M. Olsen
COPENHAGEN, Denmark – Scandinavian Airlines on Tuesday filed for bankruptcy in the United States, warning a walkout by 1,000 pilots a day earlier had put the future of the carrier at risk.
The move adds to the likelihood of travel chaos across Europe as the summer vacation period begins. SAS canceled hundreds of flights Tuesday, including services to New York (Newark) and Chicago.
The Stockholm-based SAS airline group said it had “voluntarily filed for Chapter 11 in the US, a legal process for financial restructuring conducted under US federal court supervision.”
Filing for Chapter 11 in New York puts civil litigation on hold while the business reorganizes its finances.
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SAS said that its operations and flight schedule will be unaffected by the announcement, but the pilot’s strike, which is behind most of Tuesday’s cancellations, is also a factor behind the bankruptcy filing, according to SAS CEO Anko van der Werff. “I think we have been very clear that this could happen,” he said.
“The important thing is that this is about bankruptcy protection, it is not about a bankruptcy, but it is about financial reconstruction,” van der Werff said.
The carrier said it is “in well advanced discussions with a number of potential lenders … to support its operations throughout this court-supervised process.”
A rescue plan presented in February was aimed at securing long-term competitiveness. SAS shares dropped more than 9% to 0.56 kronor ($ 0.05) on Tuesday.
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The pilots reacted strongly to the news of the Chapter 11 filing. Roger Klokset, head of the SAS pilots union, said the group “had stretched negotiations and mediation from November last year until the day before the application, without ever having the intention of entering into an agreement with the SAS pilots.”
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The pilots in Denmark, Sweden and Norway walked out on Monday, citing inadequate pay and working conditions and expressing dissatisfaction with the decision by the carrier to hire new pilots to fill vacancies at its subsidiary airlines, SAS Link and SAS Connect, rather than rehire former pilots who were laid off due to the pandemic.
Van der Werff said the strike was “devastating for SAS and puts the company’s future together with the jobs of thousands of colleagues at stake.”
By 3:30 pm ET on Tuesday, more than 75% of SAS ‘flights had been canceled according to FlightAware, which track flight information in real-time. Flights operated by SAS Link, SAS Connect and SAS ‘external partners are not affected.
The airline is part-owned by the governments of Sweden and Denmark. In 2018, Norway sold its stake but holds debt in the airline, and has said it might be willing to convert that into equity.
“Right now, it is difficult to assess the significance of the Chapter 11 request for duration of the pilot strike,” chief analyst Jacob Pedersen of Denmark’s Sydbank said. However, “it’s doubtful whether it will bring (the pilots) back to the negotiating table.”
The move by SAS was “not surprising” but came “faster than we expected,” Pedersen said in an analysis. “Although SAS is now under bankruptcy protection, it is not a beach holiday for the company.”
The SAS strike isn’t the only issue on the horizon for European travelers through the end of this summer. Refueling staff at London’s Heathrow Airport announced they, too, would strike for 72 hours beginning on July 21.
Contributing: Jari Tanner, AP; Zach Wichter, USA TODAY