Scandinavian, or SAS, the Swedish-Danish-Norwegian Star Alliance carrier headquartered in Stockholm, has filed for Chapter 11 bankruptcy protection in the U.S. following the start of a pilots strike that the carrier expects will cancel half of its flights.
The carrier expects bankruptcy to last 9-12 months and plan to use the process to assist in implemention of its $725 million cost-cutting plan which also includes conversion of some debt into equity.
They contend they will be able to continue operations and fully honor frequent flyer program obligations, and report a cash balance of US($756 million although they’re seeking an additional $700 million in financing. This comes after the airline burned through about a billion dollars of government subsidy during the pandemic and restructured regional operations.
It wouldn’t be the worst idea to credit any Scandinavian flights to partner frequent flyer programs, though unless you’re on q question for their elite status that’s generally a good idea anyway.
Excuse me? Finnish? I don’t think so.
Union’s asking for too much even though the company is collapsing. I’m sure a few other carriers will pick them up with somewhat same pay for lower seniority.
The average SAS pilot was making about US$120K/yr. and going up to US$140K . . . I emphasize WAS.
In contrast SAS hadn’t paid shareholders a dividend since 2001!
Seems like the plots had a pretty good gig and that they killed the goose that laid the golden eggs.
Curious why SAS declares bankruptcy in US as opposed to somewhere in Scandinavia?
Come on Gary – you know better. This is just lazy:
– SAS is Norway/Sweden/Denmark and not Finland
– Headquarters are in Solna, Sweden and not Stockholm
– Largest hub is actually Copenhagen and that is where their cargo operations are headquartered
You of all people should be able to correctly document stuff like this
@Ken, you will notice that most recent foreign airline bankruptcies have been similarly filed in US Bankruptcy Court in NY (i.e., LATAM, Avianca, etc.). The jurisdictional requirements are minimal and have the benefit that the “Stay” prohibiting creditors from pursuing assets during the proceeding extends to any company within the reach of US jurisdiction – and that is essentially every financial company in the world. Also, unlike declaring bankruptcy in most parts of the world, a debtor need not be completely insolvent to file, and can file for restructuring with the debtor remaining in control of the assets (so-called Debtor in Possession) instead of liquidation with a third-party trustee in control.
I’d like to learn how to convert “some debt into equity.”
Unions should be illegal.
@Mak, so
AirBerlin was run by idiots who didn’t try this trick?
Finland has their own national airline Gary.
@Mak
Thx for the explanation about bankruptcy— clearly financial markets are very interwoven if foreign companies can utilize US bankruptcy laws to their favor.
US laws says that a company must file bankruptcy in the state/country in which they are chartered. Why would SAS file in the US?
KoggeriJ,
You are an idiot. 120K for pilot salary is peanuts. Thank you for your useless input and keep flipping those burgers
Solna is part of Stockholm. It’s not only a SL (Stockholm public transport company) stop on the blue line of the T-bana, it’s also part of Stockholm “county” in various ways.
@AlliW “US laws says that a company must file bankruptcy in the state/country in which they are chartered. Why would SAS file in the US?”
US law doesn’t say this at all. Federal US law provides that you need only have assets in the USA or a place of business here.
@ABC I don’t know anything about the Air Berlin bankruptcy, but that was a rather different situation as its biggest creditor was also its largest creditor, Etihad, and the goal was liquidation for it’s benefit, not reorganization.
Things have changed since the Air Berlin bankruptcy.
Good move on SAS. The gravy train will be over, and the company will be positioned closer to what the market wants – and is willing to pay for.
So SAS senior pilots are making around 1/3 of what AA senior pilots make but while paying vastly higher income taxes? With what they had to pay to become commercial pilots, it’s easy to see why they’re striking.
Marco,
The “gravy train” was what? The company agreed to employment terms that it wants to repeatedly re-neg on despite previous concessions granted by the employees.
The average SAS pilot is typically living in a Scandinavian house that is no more expensive than the median US home price for comparably sized cities in the US and has post-tax income that is lower than comparably senior pilots in the US.
SAS has many problems but overpaid employees isn’t what got the company into a weak financial position.
At root the problem really comes down to incompetent airline management and government shareholders being repeatedly willing to give additional life to the zombie company.