SAS seeks bankruptcy protection in the USA – E24

SAS seeks bankruptcy protection in the USA - E24

The day after the strike of 900 SAS pilots, the ill-fated airline filed for bankruptcy protection in the United States.


Status is updated.

SAS and some of its subsidiaries have voluntarily filed for US bankruptcy protection, so-called Chapter 11. This is a legal process of financial restructuring under the oversight of a US federal court. In short, this means that SAS creditors cannot file for bankruptcy.

The news comes the day after more than 900 SAS pilots went on strike and several hundred flights were cancelled. Only on Tuesday and Wednesday, 163 flights aboard SAS were canceled, according to VG Air Traffic Overview. After the news became known, SAS stock fell sharply at the opening of the Oslo Stock Exchange on Tuesday.

SAS’ Norwegian press director Tonje Sund told E24 that the company would not comment on the matter ahead of the 08.45 press conference on Tuesday.

in stock market announcement SAS wrote that they expect to be able to meet their future trading obligations in the short term.

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And the company’s report stated that “the strike has a negative impact on the company’s liquidity and financial position, and if it is extended, the impact may be significant.” The pilot strike in 2019 lasted six days and cost the airline about NOK 700 million.

SAS reports that it has come a long way in talks with a number of potential lenders to secure additional funding of up to $700 million (about SEK 7 billion) to support operations through the legal process.

SAS chief asks pilots to end strike

In the report, SAS wrote that the company’s operations and planned flights were not affected by the bankruptcy protection filing. This means that the airline, among other things, will continue to refund tickets for passengers affected by the pilots’ strike.

In recent months, we have worked hard to improve our cost structure and financial position. We are making progress, but there is still a lot of work to do and the ongoing strike has made an already difficult situation even more difficult. The Chapter 11 process gives us legal tools to speed up our transformation, while at the same time we can continue business as usual, SAS CEO Anko van der Werf says in the report.

We encourage the SAS Scandinavian pilots’ associations to end the strike and to contribute constructively to this process, he continues.

Roger Clocust, chief SAS pilot, reacts aggressively to the SAS management’s grip.

“The pilots are wise, and this reinforces our impression that this is a deliberate strike by management — to create scapegoats,” Clocust says in a press release.

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This is Chapter 11.

Chapter 11 is a negotiated solution to US debt.

Simply put, an insolvent company with a connection to the United States has two options under US bankruptcy law.

A company can either apply for Chapter VII, which includes liquidation, or alternatively Chapter 11 bankruptcy protection, which deals with reorganization or restructuring of the company.

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Chapter 11 is Chapter 11 of the United States bankruptcy law, but one should not be fooled by the word “bankruptcy” in “bankruptcy protection.” The word bankruptcy protection means protection from the ability of creditors to bankrupt the company – they cannot forfeit the assets and the banks cannot take out any mortgage.

Norwegian received bankruptcy protection in Ireland in December 2020, while the airline missed the rescue package.

The need to cut costs and raise funds

Sass is in an economic crisis. In February, the group launched the “SAS Forward” savings program, which will reduce annual costs by 7.5 billion Swedish kronor.

The company also announced that it needed to convert 20 billion SEK debt into equity and raise 9.5 billion SEK in new money. This will then dilute the current owners.

Sweden and Denmark each own 21.8 percent of SAS, while Norway sold the entirety of SAS in 2018.

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The best thing for SAS right now could be the bankruptcy process

SAS owes money to all three countries, and they chose slightly different strategies:

  • Denmark’s political majority allows the conversion of SAS debt into equity, and is also willing to increase the Danish ownership stake in SAS to between 22 and 30 percent.
  • Sweden said the country is not a long-term owner of SAS and will not invest more money now, but the Swedes are also willing to convert SAS debt into equity
  • Norway is also open to converting the SAS debt to the Norwegian state of 1.5 billion NOK into equity, but Norway will not enter with new money
Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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