PanamaTimes

Thursday, Apr 25, 2024

Airline SAS files for U.S. bankruptcy protection as strike grounds flights

Airline SAS files for U.S. bankruptcy protection as strike grounds flights

Scandinavian airline SAS has filed for bankruptcy protection in the United States to help cut debt, it said on Tuesday, warning strike action by pilots had deepened its financial crisis.
Wage talks between SAS and its pilots collapsed on Monday, triggering a strike that adds to travel chaos across Europe as the peak summer vacation travelling season shifts into full gear for the first time since the COVID-19 pandemic struck.

That accelerated the airline's decision to file for Chapter 11 bankruptcy protection in the United States, its Chief Executive Anko van der Werff said, as it sought breathing space to carry out restructuring plans.

"SAS aims to reach agreements with key stakeholders, restructure the company's debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection," it said.

The company said in its court filing the strike would cost it $10 million to $13 million per day, while a Sydbank analyst estimated in a worst-case scenario it could erase up to half of its cash flow in the initial four to five weeks alone.

SAS said discussions with lenders regarding another $700 million of financing were "well advanced".

It said it would continue to serve its customers throughout the bankruptcy process, although the strike is grounding roughly half the airline's flights, affecting some 30,000 passengers per day.

Data from flight tracking website FlightAware showed 232 SAS flights - 77% of those scheduled - had been cancelled on Tuesday, while Oslo's Gardermoen airport, one of SAS' hubs, had the world’s highest cancellation rate on the day.

The airline, whose biggest owners are the Swedish and the Danish states, said the bankruptcy protection filing was aimed at accelerating a restructuring plan announced in February.

It expects to complete the Chapter 11 process in nine to 12 months, it added. SAS shares, which can be traded as normal during the bankruptcy proceedings, were down 14% at 1019 GMT.


COSTS TOO HIGH

Wallenberg Investments, SAS's third biggest shareholder with a 3.4% stake, said it supported the decision and would allow for talks to continue to attain a level of costs and debts that made the airline competitive.

"For decades, SAS has had too-high costs and too-low productivity compared to its rivals," it said.

SAS needs to attract new investors and has said to do that it must slash costs across the company, including for leased planes that stand idle because of closed Russian airspace and a slow recovery in Asia.

Its finance chief Erno Hilden said in the court filing the airline had so far been unable renegotiate lease terms, many of which it said were "significantly above" market rates.

In terms of debt, SAS had three bonds outstanding , , with a total face value of 5.4 billion Swedish crowns ($519 million). They now trade at deeply distressed levels of around one third of face value.

The airline predicted its cash balance of 7.8 billion Swedish crowns was sufficient to meet its business obligations in the near term.

It added however that the strike "has a negative impact on the liquidity and financial position of the company and, if prolonged, such impact could become material".

Sweden's government has said no to injecting more cash into the carrier, while Copenhagen has said it may do so if SAS is able attract new investors.

Nordnet analyst Per Hansen said the application showed SAS needs a fresh start and that it thinks the strike will drag on.

"Chapter 11 protection comes early," he said. "Management and the board want to make it absolutely clear for all stakeholders that the situation is very serious."

($1 = 10.3216 Swedish crowns)
Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×