Status: 07/05/2022 12:14
SAS Scandinavian airlines seem financially tied to the wall. The day after the pilots’ strike begins, the company declares insolvency. However, operations should continue.
SAS is insolvent. The company announced this morning that it has filed for bankruptcy protection under US law. The decision was made shortly after the start of yesterday’s strike by pilots. The company drew attention to its difficult financial situation before the strike, which was postponed several times. According to SAS chief Anko van der Werff, the strike sped up the decision to take this step as it puts a strain on the airline’s financial position and liquidity.
About 30,000 passengers are affected every day
In recent weeks, the planned strike has been postponed several times due to the ongoing arbitration talks between the company’s management and the pilots’ union. After the talks failed, the union went on strike yesterday with around 900 pilots.
About half of all flights will be canceled due to the strike, the company said yesterday. About 30,000 passengers are affected every day. According to CEO van der Werff, the strike is now devastating for SAS and threatens the future of the company and thousands of jobs. 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 nearly half of the pilots with the agreed reinstatement right, but is overruling the law. SAS announced a savings program earlier this year.
US law allows for financial compensation
Bankruptcy under Chapter 11 (Chapter 11) of US Bankruptcy Law, currently filed under US law, allows a company to go through reorganization. SAS is protected against creditors’ claims for a limited period of time. This also includes obligations arising from employment contracts. US companies often use this provision to initiate a structured adjustment. American law primarily protects a company in difficulty, while German bankruptcy law primarily protects creditors.
According to SAS, the process should take nine to twelve months. The group wants to agree debt restructuring with all parties involved and mobilize fresh capital through a capital increase. The airline is state-controlled by Sweden and Denmark. The governments of Sweden and Denmark each have a 21.8 percent stake in SAS and have refused to make any further financial injections following a bailout during the corona crisis. That’s why SAS uses Chapter 11.
SAS wants to continue its flight operations despite insolvency and the pilots’ strike. According to experts, a delicate task. Sydbank analyst Jacob Pedersen commented: “They are trying to repair the engine at full speed.”
A wave of strikes in the tourism boom in Europe
Amid the festive hustle and bustle at European airports, there are strikes at several airlines and at the airports. especially in a popular holiday destination in Spain. The flight crew of Irish low-cost airline Ryanair wants to go on strike for a further twelve days in July to improve working conditions, the responsible Spanish trade unions USO and Sitcpla announced over the weekend. The deck crew in Spain went on strike at the end of June as well as between Thursday and Saturday. The on-board crew of 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, weekend warning strikes led to cancellations again. About 20 percent of planned take-offs and landings were canceled on Saturday, according to the airport. Strikers are demanding higher wages and better working conditions because of rising inflation.