The carrier has sought bankruptcy protection in the US, known as Chapter 11, fearing an ongoing industrial dispute with pilots will further damage it as it recovers from the effects of the pandemic. Chapter 11 allows the airline to restructure protected from its creditors.
SAS said: “The company expects to meet its go forward business obligations in the near term.” It added it had cash balances of £621 million, but said: “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.”
Debtor-in possession financing is a type of bridge financing for businesses that are restructuring. Chapter 11 will see SAS reconfigure its fleet and aim for annual cost savings of £597 million. SAS said it expected to complete the process “in nine to 12 months”.
It added: “We will pay vendors and suppliers in full on normal terms for goods and services provided on or after the Chapter 11 filing date.”
SAS’s predicament has been exacerbated by a dispute with SAS pilots. The carrier warned the strike had had “a negative impact on the liquidity and financial position of the company and, if prolonged, such impact could become material”.
Anko van der Werff, SAS president and chief executive, said: “Over the past 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 on-going strike has made an already challenging situation even tougher.
“We urge SAS Scandinavia pilots’ unions to end their strike and engage constructively as part of this process.”
