Status: 05.07.2022 12:14 p.m.
The Scandinavian airline SAS seems to have its back against the wall financially. One day after the start of a pilots’ strike, the company declares itself insolvent. However, operations must continue.
SAS airline is insolvent. The company said this morning that it had filed for bankruptcy protection under US law. The decision came shortly after the start of a pilots’ strike which began yesterday. The company had already pointed out the difficult financial situation before the strike, which was postponed several times. According to SAS boss Anko van der Werff, the walkout hastened the decision to take this step, as it weighed on the airline’s financial position and liquidity.
Around 30,000 passengers are affected every day
In recent weeks, the planned strike has been repeatedly postponed due to ongoing arbitration talks between company management and the pilots’ union. After talks broke down, the union went on strike yesterday with around 900 pilots.
Due to the walkout, around half of all flights would be cancelled, the company said yesterday. About 30,000 passengers are affected every day. The walkout is currently devastating for SAS and jeopardizes the future of the company and thousands of jobs, according to CEO van der Werff. The decision to strike now shows the ruthless behavior of the pilots’ unions.
The Swedish Pilots Association accuses the company of using the pandemic to fire almost half of the pilots with an agreed right to reinstatement, but nullifying that right. SAS announced an austerity program earlier this year.
US law makes financial realignment possible
Bankruptcy under Chapter 11 (Chapter 11) of the US Bankruptcy Act, which has now been sought under US law, allows the company to undergo reorganization proceedings. SAS is protected against claims by creditors for a certain period of time. This also includes obligations arising from employment contracts. American companies often use this provision to initiate an orderly realignment. US law primarily protects the troubled company, while German insolvency law primarily protects creditors.
According to the SAS, the process should take between nine and twelve months. The group wants to agree on a restructuring of the debt with all the players concerned and to raise new capital through a capital increase. The airline is controlled by Sweden and Denmark. The Swedish and Danish governments each hold a 21.8% stake in SAS and had refused further financial injections after the rescue operation in the Corona crisis. This is why SAS uses Chapter 11.
SAS wants to continue flight operations despite the insolvency and the pilots’ strike. According to experts, a delicate task. Sydbank analyst Jacob Pedersen commented: “They’re trying to fix the engine at full speed.”
Wave of strikes in Europe’s travel boom
Amid the holiday turmoil at European airports, strikes are taking place at several airlines and at airports. especially in the popular holiday destination of Spain. Cabin crew at Irish low-cost airline Ryanair want to go on strike for another 12 days in July for better working conditions, as the responsible Spanish unions USO and Sitcpla announced over the weekend. Cabin crew in Spain went on strike at the end of June and also between Thursday and Saturday. Cabin crew from British competitor Easyjet will also stop working in Spain for a total of nine days by the end of July.
At Roissy-Charles-de-Gaulle airport in Paris, warning strikes over the weekend again led to cancellations. About 20% of scheduled takeoffs and landings were canceled on Saturday, according to the airport. The strikers are demanding higher wages and better working conditions due to rising inflation.