[ad_1]
Scandinavian airline SAS said on Tuesday it had filed for bankruptcy protection in the United States to help cut debt, putting pressure on the striking pilots it blamed for deepening its financial woes and sending its shares down 10 percent.
Wage talks between the SAS and its pilots broke down on Monday, sparking a strike and further chaos for travel across Europe as the summer tourist season is in full swing.
Chief executive Anko van der Werff said the strike had accelerated its decision to apply for Chapter 11 status. But negotiators for the SAS Danish pilots said the scope of the document suggested it had been months in the making, and said the attempt to blame the strikers had sparked “contempt”.
The airline, whose largest owners are taxpayers in Sweden and Denmark, said the strike would have “a negative impact on the company’s liquidity and financial position, which could become significant if prolonged”.
The company said in court filings that the strike would cost between $10 million and $13 million a day. In a worst-case scenario, it could wipe out as much as half of its cash flow in the first four to five weeks alone, Sydbank analysts estimate.
Sydbank analyst Jacob Pedersen said: “The pilots are likely to see themselves as part of the puzzle of legalizing management’s Chapter 11 requirements, and it is questionable whether that will bring them back to the negotiating table.”
“On the other hand, the Chapter 11 requirements also show how serious the situation is at SAS.”
Moving to Chapter 11 will make it easier for companies to lay off workers, experts say.
Martin Lindgren, chairman of the Swedish Airline Pilots’ Association, said his members believed airlines would inevitably need to embark on a “rebuild”.
“This will not affect the strike or our agreement,” he said.
The airline said the U.S. bankruptcy filing was aimed at accelerating a restructuring plan announced in February.
“SAS aims to reach an agreement with key stakeholders to restructure the company’s debt obligations, reconfigure its fleet, and achieve this through a substantial capital injection,” it said.
Talk to a lender
SAS said discussions with lenders for another $700 million in financing were “going well”.
The strike has grounded about half of the airline’s flights, affecting about 30,000 passengers a day.
Data from flight-tracking website FlightAware showed 232 SAS flights, or 77% of scheduled flights, were cancelled on Tuesday, with Oslo Gardermoen Airport, one of the SAS hubs, having the highest rate of cancellations that day.
It added that SAS expects to complete the Chapter 11 process within nine to 12 months. SAS stock may trade normally during bankruptcy proceedings.
Wallenberg Investments, SAS’ third-largest shareholder with a 3.4% stake, said it supported the decision and would allow negotiations to continue to make the airline competitive.
“For decades, SAS has been too costly and too low-productive compared to its competitors,” it said.
SAS needs to attract new investors and says it must cut costs across the company, including leased planes that have been idled by the closure of Russian airspace and a slow recovery in Asia.
Its treasurer, Erno Hilden, said in court filings that the airline has so far been unable to renegotiate lease terms, many of which are “significantly above” market rates.
SAS has three outstanding bonds with a total face value of SEK 5.4 billion ($519 million). They are now trading at about a third of face value, at extremely depressed levels.
The airline expects its cash balance of SEK 7.8 billion to be sufficient to meet its business obligations in the near term.
The Swedish government has refused to inject more cash into the airline, while Copenhagen has said it may do so if SAS can attract new investors.
Nordnet analyst Per Hansen said the US filing showed SAS needed a fresh start and it believed the strike would drag on. “Management and the board want to make it clear to all stakeholders that the situation is very serious.”
Watch WION live here
you can Write now for wionews.com and become part of the community.Share your stories and perspectives with us here.
[ad_2]
Source link