Faced with monetary difficulties and a large pilot strike, Scandinavian airline SAS mentioned Tuesday it has filed for so-called Chapter 11 bankruptcy proceedings in the United States, as part of restructuring plan.
“We simply need to do much more and do it much faster,” SAS chairman Carsten Dilling advised a press convention the place defended what he known as “a well thought-through decision.”
In the US, Chapter 11 is a mechanism permitting an organization to restructure its money owed underneath courtroom supervision whereas persevering with to function.
The transfer was made in order “to proceed with the implementation of key elements” of its enterprise transformation plan, the troubled service, which employs practically 7,000 individuals, mentioned in an announcement.
Asked why the corporate selected provoke the proceedings in the US, somewhat than Sweden the place it’s headquartered, Dilling mentioned that they had thought of a number of international locations the place they may file, however “ended up concluding that the US framework is the right one for the company.”
Chief government Anko van der Werff mentioned they anticipated “to complete the Chapter 11 process in nine to 12 months.”
SAS mentioned its “operations and flight schedule are unaffected by the Chapter 11 filing, and SAS will continue to serve its customers as normal,” whereas noting that the continuing strike by Scandinavian pilot unions would proceed to affect operations.
‘Last factor SAS wants’
“A strike is the last thing the company needs right now,” van der Werff advised reporters.
Pilots walked out on Monday after negotiations between the unions and the corporate broke down.
The pilots are protesting towards wage cuts demanded by administration as a part of a restructuring plan geared toward making certain the survival of the company, which has suffered a string of losses because the begin of the coronavirus pandemic in early 2020.
On Monday, SAS mentioned that the strike (*11*) impacting round 30,000 passengers a day.
SAS administration introduced in February the financial savings plan to chop prices by 7.5 billion Swedish kronor ($700 million), dubbed “SAS Forward”, which was supplemented in June by a plan to extend capital by practically one billion euros ($1.04 billion).
Denmark and Sweden are the largest shareholders with 21.8 % every.
Denmark mentioned in June it was prepared to extend its stake to 30 %. Sweden has refused to supply contemporary funds, however is keen to show debt into capital.
Norway, which left SAS in 2018, has mentioned it is able to return to the airline, however solely by changing debt into fairness.
Suffering, like the remainder of the sector, from the affect of COVID-19, SAS reduce 5,000 jobs, or 40 % of its workforce, in 2020. The service now had round 6,900 staff on the finish of May, a quantity which fell under 5,000 on the peak of the pandemic.
Shares in SAS, already at all-time lows, fell by greater than 11 % in the early hours of buying and selling on the Stockholm Stock Exchange.
SAS’s troubles comes because the summer time is shaping as much as be tough for European airways and airports, confronted with workers shortages affecting visitors.
After widespread job losses linked to COVID-19, airways and airports are struggling to recruit new workers in many international locations.
© 2022 AFP
Struggling SAS files for Chapter 11 bankruptcy proceedings in US (2022, July 5)
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