SAS and certain of its subsidiaries have voluntary filed for Chapter 11 in the US bankruptcy court for the Southern District of New York. "The purpose of the filing is to accelerate its transformation by implementing key elements of its SAS Forward plan," the Scandinavian carrier says in a release today. SAS adds that its operations and flight schedule are unaffected by the Chapter 11 filing, and it will continue to serve its customers as normal, although the strike by SAS Scandinavia pilots' unions will impact the flight schedule. The airline's cash-balance was SKr7.8 billion ($755 million) as of 30 June and it says it has sufficient liquidity to meet its business obligations in the near term. SAS states: "The strike has a negative impact on the liquidity and financial position of the company and, if prolonged, such impact could become material. The company is in well advanced discussions with a number of potential lenders with respect to obtaining additional debtor-in-possession financing for up to $700 million to support its operations throughout this court-supervised process." These steps are consistent with SAS's announcement on 31 May, that its restructuring effort SAS Forward involves complex multiparty negotiations and that the company might seek to utilise one or more court restructuring proceedings designed to assist in the resolution of its financial difficulties and help accelerate the implementation of SAS Forward.
Through this process, SAS aims to reach agreements with key stakeholders, restructure the company's debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection. SAS says it expects to complete its court-supervised process in the USA in nine to 12 months. The airline aims to convert approximately SKr20 billion of debt, including hybrid loans and term loans, into equity while also raising an additional SKr9 billion of further equity. SAS chief executive and president Anko van der Werff states: "Over the last several months, we've been working hard to improve our cost structure and improve our financial position. We are making progress, but a lot of work remains and the ongoing strike has made an already challenging situation even tougher. The Chapter 11 process gives us legal tools to accelerate our transformation, while being able to continue to operate the business as usual." Weil, Gotshal & Manges is serving as global legal counsel and Mannheimer Swartling Advokatbyr is serving as Swedish legal counsel to SAS. Seabury Securities and Skandinaviska Enskilda Banken are serving as investment bankers, while Seabury is also serving as restructuring advisor. FTI Consulting is serving as financial advisor.

British Airways has axed a further swathe of services scheduled for July as the airline and the wider industry grapple with labour shortages. Data shows that the airline has this week cancelled 517 one-way flights, equating to 76,147 seats. This represents 2.7% of its flights and 2% of its seats for the month. It will now operate 18,435 flights in July, down from expectations of 18,952 last week. This comes on top of the cancellations of 1,254 one-way flights from its July schedule, or some 214,000 seats, last week. That amounted to a 6.2% reduction in its total flights for the month, and a 5.3% drop in seats. The airline also cut 16,000 services from its summer schedule earlier in the year. BA, like much of the industry, has grappled with labour shortages and bottlenecks at airports which have hampered its ability to operate services. The UK government has ordered airlines to reappraise their schedules to cancel ahead of time those flights they will struggle to operate. Meanwhile a slot amnesty has enabled carriers to drop some services without the risk of losing their take-off and landing positions. "We took pre-emptive action earlier this year to reduce our summer schedule to provide customers with as much notice as possible about any changes to their travel plans," says BA. "As the entire aviation industry continues to face into the most challenging period in its history, regrettably it has become necessary to make some further reductions. We're in touch with customers to apologise and offer to rebook them or issue a full refund."

Pilots at SAS will go on strike this week after extended talks with management failed to produce an agreement. The Scandinavian airline group estimates that it will have to cancel half of its flights as a result of the industrial action, which it warns will have "devastating" consequences and put its future at stake. More than 1,000 SAS pilots threatened strike action in June following a failure to agree a new collective labour agreement to replace a contract that expired at the end of March. Pilot representatives want to see crewmembers laid off amid the pandemic reinstated, and have expressed concerns that the group is seeking to hire pilots on reduced salaries through its new SAS Connect and SAS Link units. Negotiations were recently extended by three days to 2 July, but the two sides were unable to reach an agreement and SAS announced on 4 July that members of its pilot unions had been called out on strike. "A strike at this point is devastating for SAS and puts the company's future, together with the jobs of thousands of colleagues, at stake," warns SAS chief executive Anko van der Werff. "The decision to go on strike now demonstrates reckless behaviour from the pilots' unions and a shockingly low understanding of the critical situation that SAS is in." The group estimates that the strike will result in the cancellation of 50% of its flights, affecting about 30,000 passengers a day. Flights operated by SAS Link, SAS Connect and the group's external providers will not be affected. SAS says it wishes to continue mediation in the hope that an agreement can be reached to "end the strike as soon as possible".