Carrier SAS files for Chapter 11 bankruptcy protection in US

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.

The Stockholm-based 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 reorganises its finances, dubbed SAS Forward.

SAS said that its operations and flight schedule will be unaffected by the announcement. Anko van der Werff, CEO of SAS, said that the strike accelerated the move. "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." The rescue plan, presented in February, is aimed at securing long-term competitiveness.

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.'' 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 re-hire former company pilots 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." The walkout is estimated to lead to the cancellation of approximately 50 per cent of all scheduled SAS flights and impact around 30,000 passengers per day. 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.(AP) RUP RUP

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