SAS files for Chapter11 to avoid bankruptcy
In recent weeks we have seen all kinds of things: baggage chaos in the UK and Holland, airlines [...]
Scandinavian Airlines (SAS)
Star Alliance
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In recent weeks we have seen all kinds of things: chaos luggage in the UK and the Netherlands, airlines canceling flights overnight, shortage of staff across the industry and scattered strikes around the world.
Adding meat to the fire is the SAS, Scandinavian Airlines, which stated. bankruptcy and filed for "Chapter 11" in the United States, or a kind of "assisted bankruptcy." The Scandinavian airline has been bent both by the pandemic than by the shortage of personnel, the coup de grace came from the recent pilot strike who rebelled against the wage cut due to economic hardship.
The company's restructuring plan includes staff cuts and a program that will seek to save about 700 million year, a considerable amount of money, practically 1/4 of its turnover.
The current liquidity of SAS is about 740 million, the administration is trying to retrieve 700 million in additional funding to try to support operability company during the bankruptcy process.
"In recent months, we have been working hard to improve our cost structure and financial position. We are making progress, but much work remains, and the ongoing strike has made an already challenging situation even more difficult. The Chapter 11 process provides us with legal tools to accelerate our transformation, while being able to continue to run the business as usual.
We will continue to rebuild the network connectivity, products, and service that our customers expect, and we will continue to do so during this process and beyond. 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. Becoming a more competitive airline will require the whole team effort and burden sharing from all stakeholders. We urge the SAS Scandinavia pilot unions to end their strike and engage constructively as part of this process."
Anko van der Werff, President and CEO of SAS
What is U.S. Chapter 11.
When a company (or even an individual) is in bad water and is on the brink of bankruptcy can make a voluntary request or be forced to appeal to the Chapter 11 of the U.S. Bankruptcy Code.
It is basically a reorganization Company aimed at keeping its operations alive in order to pay suppliers e employees over time and avoid total bankruptcy. The court appoints a curator which follows the company at all stages and tries to limit the damage. The court also freezes the company's cash and requires that it be spent only to ensure the facility's operations.
SAS Airlines had been in trouble for a few years already, the pandemic made the situation worse, and the company had to cut more than the 40% of its staff. The recent strike by 1,000 pilots caused the 78% of departures, about 2,500 flights, causing damage estimated to be around the 9 million a day.
The receivership plan for corporate restructuring is called the SAS Forward and was announced after an agreement was reached with the pilots' unions who went on strike for 15 consecutive days, causing large losses to the company.
"After a 15-day strike, SAS and SAS Scandinavia pilot unions have reached an agreement. The parties have agreed on new 5.5-year collective agreements, and SAS Scandinavia flights will resume their regular traffic schedule as soon as possible.
Finally, we can resume normal operations and transport our customers on their long-awaited summer vacation. I deeply regret that so many of our passengers have been affected by this strike."
Note from SAS Airlines
"SAS pilots have taken responsibility to sign a new agreement with SAS and the strike will end."
Statement from the Swedish Airline Pilots Association
There are 450 pilots who will be rehired under the new agreement with a collective agreement of 5.5 years and it seems that operations have resumed normally. The chaos of canceled flights shows no sign of abating, staff shortages are putting the industry in a difficult situation, we'll see what happens in the coming weeks.
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