It accelerated the airline’s decision to apply for Chapter 11 bankruptcy protection in the United States, the airline’s CEO Anko van der Werff said at a news conference on Tuesday.
The company said in a statement that it would continue to serve its customers throughout the bankruptcy process, even if the pilot strike affects its flight plan.
It said the purpose of the filing with a U.S. federal court was to expedite a restructuring plan announced in February.
“Through this process, SAS aims to enter into agreements with key stakeholders, restructure the company’s debt obligations, reconfigure its fleet and come up with a significant capital injection,” SAS said in a statement.
It expects to complete the Chapter 11 process in nine to 12 months, it added. SAS shares fell by as much as 6% after the application was announced, trading 2% lower at. 0728 GMT (0228 AM ET)
“It does not matter for normal operation. They try to repair the engine while driving,” Sydbank analyst Jacob Pedersen told Reuters about the SAS application.
“This is because SAS has not been able to implement the changes through negotiations.”
SAS must attract new investors and has said that in order to do so, it must cut costs across the company, including for staff and for leased aircraft, which are at a standstill due to closed Russian airspace and a slow recovery in Asia.
The airline said on Tuesday that its assessment was that its cash balance of 7.8 billion Swedish kroner (756 million USD) was sufficient to meet its business obligations in the short term.
SAS said discussions with lenders about an additional $ 700 million in financing to support its restructuring operations were “well under way”.
It added, however, that the strike “has a negative impact on the company’s liquidity and financial position, and if extended, such an impact could be significant.”
Nordnet analyst Per Hansen said that the application showed that SAS needs a fresh start and that they believe that the strike will drag on.
“Chapter 11 protection comes early,” he said. “The management and the board want to make it very clear to all stakeholders that the situation is very serious.”
