Jan M. Olsen
COPENHAGEN, Denmark — Scandinavian Airlines filed for bankruptcy in the United States on Tuesday, warning that a walkout of 1,000 pilots a day earlier had put the carrier’s future at risk.
The move adds to the likelihood of travel chaos across Europe at the start of the summer vacation period. SAS canceled hundreds of flights on Tuesday, including services to New York (Newark) and Chicago.
Stockholm-based airline group SAS said it had “voluntarily filed Chapter 11 in the United States, a legal financial restructuring proceeding conducted under the supervision of a US federal court”.
Chapter 11 filing in New York puts civil lawsuits on hold while company reorganizes finances.
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SAS said its operations and flight schedule would not be affected by the announcement, but the pilots’ strike, which caused most of Tuesday’s cancellations, was also a factor behind the filing. balance sheet, according to SAS CEO Anko van der Werff. “I think we’ve been very clear that it could happen,” he said.
“The important thing is that it’s about bankruptcy protection, it’s not about bankruptcy, it’s about financial reconstruction,” van der Werff said.
The carrier said it was “in well-advanced discussions with a number of potential lenders … to support its operations through this court-supervised process.”
A bailout presented in February aimed to ensure long-term competitiveness. SAS shares fell more than 9% to 0.56 crowns ($0.05) on Tuesday.
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Pilots reacted strongly to the news of the Chapter 11 filing. Roger Klokset, head of the SAS pilots’ union, said the group “stretched negotiations and mediation from November last year until the eve of request, without ever having any intention of entering into an agreement with the SAS pilots”.
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Pilots in Denmark, Sweden and Norway quit on Monday, citing inadequate wages and working conditions and expressing dissatisfaction with the carrier’s decision to hire new pilots to fill vacancies at its subsidiaries, SAS Link and SAS Connect, rather than rehiring former pilots laid off due to the pandemic.
Van der Werff said the strike was “devastating for SAS and puts the future of the company and the jobs of thousands of colleagues at stake”.
As of 3:30 p.m. ET on Tuesday, more than 75% of SAS flights had been canceled according to FlightAware, which tracks flight information in real time. Flights operated by SAS Link, SAS Connect and SAS external partners are not affected.
The airline is partly owned by the Swedish and Danish governments. In 2018, Norway sold its stake but has debt in the airline and said it might be willing to convert it into equity.
“At present, it is difficult to assess the significance of the Chapter 11 request for the duration of the pilots’ strike,” said chief analyst Jacob Pedersen of Sydbank in Denmark. However, “it is doubtful that this will bring (the pilots) back to the negotiating table”.
SAS’ decision was “not surprising” but came “faster than expected”, Pedersen said in an analysis. “Although SAS is now under bankruptcy protection, this is no beach vacation for the company.”
The SAS strike isn’t the only problem on the horizon for European travelers until the end of this summer. Refueling staff at London Heathrow Airport have announced they will also strike for 72 hours from July 21.
Contributor: Jari Tanner, AP; Zach Wichter, USA TODAY