Scandinavian Airlines (SAS) filed for protection from creditors under Chapter 11 of the US bankruptcy code on Tuesday, claiming it’s “the best way” to restructure, cut costs and try to keep flying. Striking pilots countered that they’re being used in a process to circumvent their demands and blame them for SAS’ current crisis.
“The pilots have been cheated, and this reinforces our impression that management wanted this strike, to create a scapegoat,” claimed Roger Klokset, leader of SAS’ striking pilots in Norway.
Around 900 of the airline’s pilots in all three Scandinavian countries went on strike Monday mostly because of SAS’ restructuring plans that will now have court protection. Pilots in Norway, Sweden and Denmark claim SAS management’s restructuring threatens “the Scandinavian model” that views employers and employees as equal partners and aims to provide secure jobs with good pay and benefits.
They went on strike because several hundred of them laid off during the Corona crisis haven’t been rehired by SAS’ parent company but by new subsidiaries with different labour agreements and working conditions. “This conflict is difficult to resolve because it primarily involves strong principles,” Kristine Nergaard of the Oslo-based labour research organization Fafo told newspaper Dagsavisen on Tuesday. The pilots’ strike has full support from Norway’s largest trade union federation LO and all the left-leaning political parties plus some others as well.
The pilots’ strike, their third in the past five years, is not particularly popular with the public. SAS’ new chief executive Anko van der Werff, who is Dutch, has criticized what he calls a “strike culture” at SAS and unreasonable demands from Scandinavian pilots at a time when the airline is struggling to recover from two years of Corona groundings and faces tough international competition. The strike called Monday, which is forcing mass cancellations of SAS flights and ruining summer holidays for tens of thousands of passengers, has also had mixed reviews from media commentators.
Van der Werff repeated at a press conference Tuesday morning that the strike is “the last thing we need right now,” noting that it’s putting pressure on SAS’ liquidity, adding to costs and agreeing with analysts that it’s jeopardizing SAS’ future. He firmly denied, though, that the decision to file for bankruptcy protection in the US was prompted by the strike, claiming the strike merely “accelerated” it. “The strike brought the (bankruptcy filing) day forward because the company needs to protect its liquidity,” he said.
The leader of SAS’ board of directors, Carsten Dilling, said the company chose to file for protection in the US because its Chapter 11 provisions allow the company to continue operating while restructuring and cutting costs. “It’s the best way to achieve SAS’ objectives,” Dilling said at the press conference, “including efforts to cut SEK 7 billion in costs.” Van der Werff added that since SAS aircraft “will stay with us” and not be recalled by lenders or lease holders, SAS will be able to “keep flying throughout the restructuring process,” which he said he expected to take nine to 12 months. The company stressed that SAS will also continue “paying vendors and suppliers in full on normal terms” and paying employees and providing benefits. Cabin crew working on all the flights now being cancelled by the pilots’ strike were, however, put on furlough Tuesday.
Van der Werff urged SAS pilots in Scandinavia (non-Scandinavian pilots hired by the new subsidiaries SAS Go and SAS Connect are not involved in the strike and are still flying) to return to the negotiating table and end their strike. A protected restructuring under the US Bankruptcy Code “is what we need in terms of burden sharing,” he said. Ending the strike and getting flights back on schedule, he claimed, is also the only way SAS can hope to attract new needed capital from investors, since the governments of Sweden and Norway aren’t willing to inject more taxpayer money into the airline and Denmark will only if the restructuring (known as SAS Forward) moves ahead.
SAS shares took a dive when the Oslo Stock Exchange opened Tuesday morning, down 8.75 percent at one point while rivals Norwegian Air and Flyr were up 4.3- and 9.33 percent respectively. They’re gaining on the strike at SAS, filling whatever empty seats they had with stranded SAS passengers.
It all puts even more pressure on SAS pilots, who reacted angrily to the bankruptcy filing. Klokset of the Norwegian pilots’ union claimed the company had been preparing a Chapter 11 filing since last fall (which management denied) and blames SAS management for wanting a strike that could be used as a catalyst for the bankruptcy protection move.
Dilling, meanwhile, noted that the pilots’ strike forced SAS to cancel another 250 flights on Tuesday. “This is a catastrophe for SAS,” he told Norwegian Broadcasting (NRK).