SAS, the Scandinavian airline, has initiated bankruptcy proceedings in the U.S.

On Tuesday, Scandinavian Airlines declared bankruptcy in the United States, stating that a strike involving 1,000 pilots the previous day jeopardized the airline's future. This development raises the risk of travel disruptions throughout Europe as the summer vacation season kicks off.

The SAS airline group, based in Stockholm, announced its voluntary Chapter 11 filing in the U.S., a legal procedure aimed at financial restructuring under the oversight of federal courts.

By filing for Chapter 11 in New York, SAS can pause civil lawsuits while it reorganizes its financial situation. The airline confirmed that its operations and flight schedules will remain unchanged despite this announcement.

CEO Anko van der Werff noted that the pilots' strike hastened this decision. "We have been very clear that this could occur," he remarked.

"The key point is that this pertains to bankruptcy protection, not bankruptcy itself; it’s about financial restructuring," van der Werff stated.

The airline announced it is "engaged in advanced discussions with several potential lenders to support its operations throughout this court-supervised process."

A rescue strategy introduced in February was designed to enhance long-term competitiveness. On Tuesday, SAS shares fell over 9 percent, reaching 0.56 kronor (US$0.05).

The pilots reacted strongly to the Chapter 11 announcement. Roger Klokset, leader of the SAS pilots' union, claimed the group had prolonged negotiations and mediation since last November, without any intention of reaching an agreement with the SAS pilots.

Pilots in Denmark, Sweden, and Norway went on strike Monday, citing poor pay and working conditions. They expressed frustration over the airline's choice to hire new pilots for its subsidiary airlines, SAS Link and SAS Connect, instead of reinstating former pilots who were laid off during the pandemic.

Van der Werff stated that the strike is "devastating for SAS and jeopardizes the future of the company along with the jobs of thousands of colleagues."

The strike is projected to result in the cancellation of about 50 percent of all SAS flights, affecting around 30,000 passengers daily. Flights operated by SAS Link, SAS Connect, and external partners will not be impacted.

The airline is partially owned by the Swedish and Danish governments. In 2018, Norway divested its stake but still holds debt in the airline, indicating a potential willingness to convert that debt into equity.

Chief analyst Jacob Pedersen from Denmark's Sydbank mentioned that it is challenging to determine the implications of the Chapter 11 filing on the duration of the pilot strike, adding, "It’s unlikely to bring the pilots back to the negotiating table."

According to Pedersen, SAS's decision was "not surprising" but occurred "more quickly than anticipated." He added, "Even though SAS is now under bankruptcy protection, it’s far from a vacation for the company."