Stockholm (Reuters) -The Scandinavian airline SAS said Tuesday that it had filed for bankruptcy in the United States. It said that a strike by pilots had hurt its finances and liquidity.
On Monday, wage talks between SAS and its pilots broke down. This led to a strike, which is making travel more difficult across Europe just as the busy summer vacation season starts.
The company said in a statement on Tuesday that it would continue to serve its customers during the bankruptcy process, even though the strike by its pilots is making it harder to plan flights.
It said that the filing was done to speed up a reorganisation plan that had been announced in February.
“To move forward with implementing key parts of the plan, SAS and some of its subsidiaries have voluntarily filed for chapter 11 in the U.S.” it said. A Chapter 11 is a legal process for reorganising finances that is overseen by a U.S. federal court.
SAS needs to find new investors and has said that in order to do so, it needs to cut costs all over the company. This includes cutting costs for staff and for leased planes that aren’t being used because Russia’s airspace is closed and Asia’s economy isn’t improving quickly enough.
The airline said on Tuesday that it thought it had enough cash to meet its business obligations in the near future.
It also said that the strike “has a negative effect on the company’s liquidity and financial position, which could become significant if it lasts longer.”
Per Hansen, an analyst at Nordnet, said that the application showed that SAS needs to start over and that it thinks the strike will go on for a long time.
He said, “Chapter 11 protection comes early.” “Management and the board of directors want everyone to know that the situation is very serious.”
During the pandemic, several airlines, like LATAM and Philippine Airlines, have also asked for Chapter 11 protection in the United States. Philippine Airlines has left the market, and LATAM plans to do the same in the second half of this year.
