Scandinavian Airlines files for bankruptcy in the US after 1,000 of its pilots voted to strike over failed pay negotiations

·2 min read
SAS.
Markus Mainka/Shutterstock.com
  • European carrier Scandinavian Airlines (SAS) filed for Chapter 11 bankruptcy in the US on Tuesday.

  • The move comes after 1,000 pilots voted to strike on Monday, forcing SAS to cancel half its flights.

  • SAS pilot union head Roger Klokset said the company never intended to make a deal with the pilots.

It has been a challenging week for European carrier Scandinavian Airlines.

On Tuesday, SAS announced it had voluntarily filed for Chapter 11 bankruptcy in the US — just a day after 1,000 of its pilots walked off the job.

According to the US Courts, Chapter 11 bankruptcy gives a company time to reorganize its debts and assets while continuing to run its business.

In the case of SAS, the cash-strapped airline is undergoing a $3 billion restructuring plan that will focus on revising its fleet, reducing its debt, and raising capital, which will take 9-12 months. The carrier said it is not uncommon for international airlines to use the court-supervised process.

"The process we have commenced will enable SAS to continue our more than 75-year legacy of being integral to Scandinavian infrastructure and societies," SAS board chairman Carsten Dilling said. "We are confident that the actions we are taking will strengthen SAS' ability to capture the significant opportunities ahead as the industry continues to recover from the pandemic."

SAS said there would be no flight cancellations due to the filing. However, after SAS's pilot union voted to strike on Monday, the carrier was forced to cancel 51% of its scheduled flights, according to flight-tracking website FlightAware. The strike will impact 30,000 passengers per day, SAS said.

At the time of publication on Tuesday, SAS had canceled 236 flights, or 78% of its flights, per FlightAware.

The strike comes after failed negotiations over pilot pay and working conditions. The union warned of a strike on June 9 after it issued a notice of conflict to the company, but the two sides failed to reach an agreement. Roger Klokset, SAS's pilot union head, responded to the Chapter 11 filing, saying the company never had "the intention of entering into an agreement with the SAS pilots," the Washington Post reported.

SAS CEO Anko van der Werff called the strike "devastating" and "reckless" on Monday, but admitted the move accelerated Tuesday's Chapter 11 filing.

"I am convinced that this process will enable us to become an even better airline for our customers and a stronger business partner in the years to come," he said in a press release. "Becoming a more competitive airline will require the full team's effort and burden-sharing from all stakeholders. We urge SAS Scandinavia pilots' unions to end their strike and engage constructively as part of this process."

Read the original article on Business Insider