Today, SAS and its subsidiaries have filed for voluntary Chapter 11 bankruptcy in the United States. The reason behind this decision is to accelerate SAS’ transformation by implementing key elements of its SAS FORWARD plan which was announced by the airline this February.
What is a SAS FORWARD Plan?
SAS FORWARD was launched to secure long-term competitiveness for SAS in the global aviation industry through a full transformation of its business. The plan aims to strengthen SAS’ financial position and achieve a sustainable cost structure with an annual cost reduction of approximately $750 million by fiscal year 2026.
What will SAS expect from this voluntary chapter 11 filing?
As Chapter 11 filing will allow the airline to financially restructure under the supervision of the court, SAS expects to complete its court-supervised process in the U.S. in 9-12 months. Through this process, SAS plans to restructure the company’s debt, reconfigure its aircraft fleet, and emerge with a significant capital injection.
In making this decision, the CEO of SAS stated that:
“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 on-going 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. We will continue to build back the network connectivity, products and service our customers expect, and we will continue to do so throughout this process and beyond. I am convinced that this process will enable us to become an even better airline for our customers and a stronger business partner in the years to come. Becoming a more competitive airline will require the full team’s effort and burden-sharing from all stakeholders. We urge SAS Scandinavia pilots’ unions to end their strike and engage constructively as part of this process.”Anko van der Werff, President and CEO of SAS
SAS currently has around 180 aircraft ranging from wet-leased ATR-72s to brand new Airbus A350 on its fleet. Reconfiguring its fleet is still not imminent but there are possibilities that some aircraft might leave its fleet.
Business Operation and Passenger Travels:
SAS has confirmed that aside from the Chapter 11 process, its board members and management will still be in charge, and customers flying with SAS will be unaffected. SAS’ reservations, customer service, SAS EuroBonus and all other customer services and systems will continue as normal. However, there is currently a pilot strike going on so this will impact the schedules.
The pandemic has left numerous airlines to file for chapter 11 bankruptcy and SAS has become the next victim. Ironically, on the same day, it was announced, more than 900 SAS pilots planned a strike causing heavy delays and cancellations.
In my opinion, SAS had been cost-cutting already before the pandemic but there will be further cost reduction of $750 million per year, which will apparently result in a reduction in passenger service and experience as well.
I am not a big fan of SAS and have not yet flown with the airline but I have seen its various fare classes. Hopefully, they are not going to add an extra fare option from the present fare systems.