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Scandinavian airline SAS clashes with striking pilots over US bankruptcy filing

A Scandinavian Airlines (SAS) Airbus A320 plane is parked at Copenhagen Airport in Karstrup, Denmark on March 15, 2020.

Johann Nilsson | AFP | Getty Images

Scandinavian Airlines SAS .

Wage talks between SAS and its pilots broke down on Monday, sparking a strike and fueling travel disruptions across Europe as the peak summer travel season kicks into high gear.

CEO Anko van der Werff said the strike had accelerated the decision to apply for Chapter 11 status. From, he said he could see it had taken months to create and that he was trying to “disrespectfully” blame the striking staff for causing it.

The airline, whose largest owners are Swedish and Danish taxpayers, said the strike “will have a negative impact on the company’s liquidity and financial position, and if prolonged, such effects could be significant.” said.

The strike will cost $10 million to $13 million per day, the company said in a court filing. Bank of Sydney analysts estimate that in a worst-case scenario, he could lose up to half of his cash flow in just his first four to five weeks.

Sidbank analyst Jacob Pedersen said: “Pilots may have themselves figured out a piece of the puzzle that legalizes management’s Chapter 11 demands, and whether that puts them back on the negotiating table. is doubtful.

“On the other hand, the Chapter 11 demands also show how serious the situation is for SAS.”

Entering Chapter 11 will make it easier for companies to lay off workers, experts say.

Martin Lindgren, president of the Swedish Aviation Pilots Association, said its members believed it was inevitable that the airline would need to undertake a “restructuring”.

“It doesn’t affect the strike or our agreement,” he said.

The airline said its U.S. bankruptcy protection filing was aimed at accelerating restructuring plans announced in February.

“SAS aims to reach agreements with key stakeholders to restructure the company’s debt, restructure its aircraft fleet and make significant capital injections.

Discussions with lenders

SAS said talks with lenders on a further $700 million in financing are “adequate”.

The strike has halted about half of the airline’s flights, affecting about 30,000 passengers a day, it said.

According to data from flight tracking website FlightAware, 232 SAS flights (77% of scheduled flights) were canceled on Tuesday, with Oslo’s Gardermoen Airport, one of SAS’ hubs, having a higher cancellation rate for the day. It was the best in the world.

SAS added that it expects to complete the Chapter 11 process in nine to 12 months. SAS shares can be traded normally during bankruptcy proceedings.

Wallenberg Investments, SAS’ third largest shareholder with a 3.4% stake, backed the decision and said talks could continue to keep the airline competitive.

“For decades, SAS has been too costly and too unproductive compared to its competitors.

SAS has said it needs to attract new investors and cut costs across the company, including on leased planes that have been sitting idle due to Russian airspace closures and a slow recovery in Asia.

The airline’s finance chief, Erno Hilden, told the court that airlines have so far not been able to renegotiate lease terms, many of which are “significantly above” market prices.

SAS had three bonds with a total face value of 5.4 billion Swedish crowns ($519 million). They are currently trading at very tight levels of about one-third of face value.

The airline projected that its cash balance of SEK 7.8 billion would be sufficient to meet its business obligations in the short term.

The Swedish government has said no to injecting additional cash into the airline, but Copenhagen said SAS may do so if it can attract new investors.

Nordnet analyst Per Hansen said the U.S. filing shows SAS needs to make a fresh start and believes the strike will drag on. wants to make it clear to all stakeholders that the situation is very serious.”

https://www.cnbc.com/2022/07/05/scandinavian-airline-sas-applies-for-chapter-11-in-the-united-states.html Scandinavian airline SAS clashes with striking pilots over US bankruptcy filing

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