Scandinavian airline on the brink of bankruptcy
Scandinavian Airlines System (SAS) has filed for protection from creditors under Chapter Eleven of the US Bankruptcy Code.
The company explains that it decided to take advantage of the U.S. law because these provisions allow for the restructuring of companies with operations in many countries. They are often used by many large international airlines.
SAS’ restructuring plan calls for cutting costs by about $750 million a year. The company also wants to raise $950 million in new capital. It plans to restructure its debt, which reaches nearly $2 billion.
The company has had profitability problems for a long time. Its situation was made worse by the pandemic. Meanwhile, the decision to file for protection from creditors was accelerated by the pilots’ strike. They disagreed with wage cuts that were supposed to be part of the company’s restructuring plan.