Several airlines filed for Chapter 11 protection at the beginning of the Pandemic. You would think that things would be better for airlines once again, but that is not the case.

SAS has filed for Chapter 11 in the US.

Basics of SAS’ Chapter 11 filing

The legal process of filing for Chapter 11 in the US will allow the airline to restructure under the supervision of a federal court. The process is expected to take up to 12 months.

SAS primarily has operations out ofDenmark, Norway, and Sweden, and the airline has a fleet of over 120 planes.

SAS is facing a pilot strike on the same day that this filing was made. The carrier has $740 million in liquid assets. The company is worried that the strike will affect that.

SAS will continue to operate its schedule and offer earn and burn with its frequent flyer program. If the pilot strike doesn't last long, the airline believes it can still meet its business obligations. The airline will honor tickets, travel coupons, and payments.

SAS wants to get up to $700 million of additional debtor-in-bankruptcy financing to support its operations.

Anko van der Werff is the president and CEO of SAS.

“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.”

He was the CEO of Avianca when it filed for Chapter 11 in May 2020, but he only became the CEO of SAS in 2021.

SAS has filed for Chapter 11 bankruptcy protection

SAS looks to cut costs by $700+ million per year

In order to secure long-term competitiveness through a full transformation of its business, SAS is looking to cut costs by over $700 million annually. A sustainable cost structure is something the airline is trying to achieve.

SAS had an annual revenue of $4 billion, so cutting $700 million per year in costs is important.

SAS will probably cut costs when it comes to the passenger experience as a result of this.

How much more can SAS do to cut costs? Premium economy on the airline doesn't come with a blocked middle seat, but it does have a real business class. Is SAS going to close lounges? Is it possible to cram more seats into the plane?

I’m curious how much more cost cutting SAS can do

Bottom line

Several airlines have filed for Chapter 11 in the US since the beginning of the Pandemic. The company expects the process to take up to a year and hopes to cut $700 million in costs annually.

SAS is having labor issues and pilots are on strike so it should be business as usual.

SAS filed for Chapter 11.