World

Faced with financial difficulties and a massive pilot strike, Scandinavian airline SAS said Tuesday it has filed for so-called Chapter 11 bankruptcy proceedings in the United States, as a part of restructuring plan.

“We simply need to do much more and do it much faster,” SAS chairman Carsten Dilling told a press conference where defended what he called “a well thought-through decision.”

In the US, Chapter 11 is a mechanism allowing a company to restructure its debts under court supervision while continuing to operate.

The move was made in order “to proceed with the implementation of key elements” of its business transformation plan, the troubled carrier, which employs nearly 7,000 people, said in a statement.

Asked why the company chose initiate the proceedings in the US, rather than Sweden where it is headquartered, Dilling said they had considered several countries where they could file, but “ended up concluding that the US framework is the right one for the company.”

Chief executive Anko van der Werff said they expected “to complete the Chapter 11 process in nine to 12 months.”

SAS said its “operations and flight schedule are unaffected by the Chapter 11 filing, and SAS will continue to serve its customers as normal,” while noting that the ongoing strike by Scandinavian pilot unions would continue to impact operations.

– ‘Last thing SAS needs’ –

“A strike is the last thing the company needs right now,” van der Werff told reporters.

Pilots walked out on Monday after negotiations between the unions and the company broke down.

The pilots are protesting against salary cuts demanded by management as part of a restructuring plan aimed at ensuring the survival of the company, which has suffered a string of losses since the start of the coronavirus pandemic in early 2020. 

On Monday, SAS said that the strike “is estimated to lead to the cancellation of approximately 50 percent of all scheduled SAS flights,” impacting around 30,000 passengers a day.

SAS management announced in February the savings plan to cut costs by 7.5 billion Swedish kronor ($700 million), dubbed “SAS Forward”, which was supplemented in June by a plan to increase capital by nearly one billion euros ($1.04 billion). 

Denmark and Sweden are the biggest shareholders with 21.8 percent each. 

Denmark said in June it was ready to increase its stake to 30 percent. Sweden has refused to provide fresh funds, but is willing to turn debt into capital. 

Norway, which left SAS in 2018, has said it is ready to return to the airline, but only by converting debt into equity. 

Suffering, like the rest of the sector, from the impact of Covid-19, SAS cut 5,000 jobs, or 40 percent of its workforce, in 2020. The carrier now had around 6,900 employees at the end of May, a number which fell below 5,000 at the height of the pandemic.

Shares in SAS, already at all-time lows, fell by more than 11 percent in the early hours of trading on the Stockholm Stock Exchange.

SAS’s troubles comes as the summer is shaping up to be difficult for European airlines and airports, faced with staff shortages affecting traffic. 

After widespread job losses linked to Covid-19, airlines and airports are struggling to recruit new staff in many countries. 

Chinese authorities said Tuesday they could dip into pork reserves and ordered suppliers to slaughter more pigs in a bid to rein in the cost of the staple meat, after prices soared by almost a third year-on-year.

Beijing’s top economic planner was forced to respond after pork prices in the country spiked, with regulators blaming suppliers for “blindly holding supplies” and being reluctant to sell.

The National Development and Reform Commission (NDRC) said that reluctance was aimed at boosting profits, ordering major suppliers to kill pigs at a “regular pace” and stop hoarding, Xinhua said.

Late last month the meat sold for 32 percent more than in June 2021, it added.

On Tuesday, the commission said it was “looking into a release of central pork reserves”.

It has also instructed local governments to release supplies “in a timely manner” to guard against sharp price increases.

The Chinese government keeps massive stores of frozen pork in warehouses, occasionally releasing reserve meat to stabilise prices, especially during periods of peak demand including Lunar New Year.

Pork is the most commonly consumed meat in China, with the average person in the country eating more than 25 kilogrammes per year, according to OECD data.

The world’s second largest economy has mostly been spared the impact of a global surge in food prices caused by Russia’s war in Ukraine.

But pork prices were hit hard after the country’s herds were devastated by African swine fever in recent years, causing consumer inflation to spike.

In 2019, authorities said they would free up land to restore production to pre-swine fever levels, and officials have since released supplies from stockpiles to rein in costs.

“As the prices of hogs continue to rise, pig farmers are turning losses into profits… farmers are now profiting about 60 yuan (about $9) per head,” Ministry of Agriculture and Rural Affairs hog expert Wang Zuli told state broadcaster CCTV in an interview in June.

“We can say the darkest days for pig farmers are over,” Wang said, adding that supplies were expected to grow.

Even Pay, an agriculture analyst at consultancy Trivium China, told AFP it was common during periods of rising pork prices for pig farmers to “delay sales of pigs that are ready for slaughter now, assuming they’ll be able to make more next week, and the week after”.

“But if the rise in pig prices is driven by real market factors rather than mostly by speculation, the reserve releases won’t have much of an impact,” Pay said, pointing to high feed and energy costs as well as rebounding demand from restaurants post-lockdown.

Beijing is keeping a close eye on food prices as Covid disruptions, on top of higher fertiliser and fuel costs and issues with access to equipment, threaten the autumn harvest of key crops such as soybean and corn.

A hacker claiming to have stolen personal data from hundreds of millions of Chinese citizens is now selling the information online.

A sample of 750,000 entries posted online by the hacker showed citizens’ names, mobile phone numbers, national ID numbers, addresses, birthdays and police reports they had filed. 

AFP and cybersecurity experts have verified some of the citizen data in the sample as authentic, but the scope of the entire database is hard to determine.

Advertised on a forum late last month but only picked up by cybersecurity experts this week, the 23-terabyte database — which the hacker claims contains the records of a billion Chinese citizens — is being sold for 10 bitcoin (approximately $200,000).

“It looks like it’s from multiple sources. Some are facial recognition systems, others appear to be census data,” said Robert Potter, co-founder of cybersecurity firm Internet 2.0. 

“There is no verification of the total number of records and I’m sceptical of the one billion citizens number,” he added.

China maintains an extensive nationwide surveillance infrastructure that siphons massive amounts of data from its citizens, ostensibly for security purposes. 

Growing public awareness of data privacy has led to stronger data protection laws targeting individuals and private firms in recent years, although there is little citizens can do to stop the state from collecting their data. 

Some of the leaked data appeared to be from express delivery user records, while other entries contained summaries of incidents reported to police in Shanghai over a span of more than a decade, with the most recent from 2019.

The incident reports ranged from traffic accidents and petty theft to rape and domestic violence.

– ‘Heads will roll’ –

At least four people out of over a dozen contacted by AFP confirmed their personal details, such as names and addresses, as listed in the database.

“So that’s why so many people have been adding my WeChat over the past few days. Should I report this to the police?” said one woman surnamed Hao.

“I’m really confused about why my personal data has been leaked,” said another woman surnamed Liu.

In replies to the original post, users speculated that the data may have been hacked from an Alibaba Cloud server where it was apparently being stored by the Shanghai police. 

Potter, the cybersecurity analyst, confirmed that the files were hacked from Alibaba Cloud, which did not respond to an AFP request for comment.

If confirmed, the breach would be one of the largest in history and a major violation of the recently approved Chinese data protection laws.

“Heads will roll over this one,” tweeted Kendra Schaefer, tech partner at research consultancy Trivium China.

China’s cybersecurity administration did not respond to a fax requesting comment.

Most markets rose Tuesday on growing speculation US President Joe Biden is about to roll back some of the Trump-era tariffs on Chinese goods as he looks for ways to rein in inflation, though sentiment remains at a premium owing to fears of a recession.

The mood on trading floors has become increasingly gloomy in recent months as observers warn that sharp interest rate hikes aimed at curbing price rises could cause a contraction, compounding uncertainty caused by Russia’s war in Ukraine.

Still, equities were on the up Tuesday on talk that the White House is about to remove duties on some of the hundreds of billions of dollars worth of imports from China, with reports saying an announcement could come this week.

With some of the tariffs due to expire soon, officials in Washington have been discussing the measures with an eye on inflation, which is sitting at four-decade highs.

And in a sign that something could be on the cards, China’s state-run Xinhua news agency said Treasury Secretary Janet Yellen and Vice Premier Lui He had held discussions.

“The two sides agree that as the world economy is facing severe challenges, it is of great significance to strengthen macro-policy communication and coordination between China and the United States,” it said. 

“And jointly maintaining the stability of the global industrial and supply chains is in the interests of both countries and the whole world.”

Reports also said that Biden was considering launching new probes into industrial subsidies — allowing for more targeted measures in strategic areas — to appease China hawks.

Hong Kong, Tokyo, Sydney, Seoul, Taipei, Mumbai, Wellington, Manila and Jakarta were all in positive territory. However, Shanghai gave up early gains and ended marginally down, while Singapore was also off.

London dipped but Paris and Frankfurt were up in early trade.

US markets were closed Monday for a holiday.

“Given that inflation remains the White House public enemy number one, (investors are) leaning toward a gradual rollback of some China tariffs as it would reduce end costs to US consumers,” said SPI Asset Management’s Stephen Innes.

However, some commentators said that while the removal of some tariffs would be widely welcomed by traders, they were unlikely to have a long-lasting effect on inflation.

“Markets are likely to react positively on a knee-jerk because at this point we are hungry for any signs of positive news,” Charu Chanana, of Saxo Capital Markets, said.

“But we don’t see the move impacting the global growth and inflation dynamics in a significant way.”

Oil prices were mixed as traders assess the market with demand outstripping supplies as the Ukraine war rages with no sign of an end, while investors are keeping tabs on China as it sees fresh Covid outbreaks that have led to some cities being put into lockdown.

Months-long flare-ups in Shanghai and Beijing earlier in the year saw millions of people ordered to stay home, sending shockwaves through the domestic economy and battering supply chains.

“China is the real wildcard here: it’s going to be two steps forward, one step back,” said Australia & New Zealand Banking Group’s Daniel Hynes.

“A demand recovery in China could potentially offset weakness in developed economies as central banks tighten monetary policy.”

– Key figures at around 0810 GMT –

Tokyo – Nikkei 225: UP 1.0 percent at 26,423.47 (close)

Hong Kong – Hang Seng Index: UP 0.1 percent at 21,853.07 (close)

Shanghai – Composite: FLAT at 3,404.03 (close)

London – FTSE 100: DOWN 0.3 percent at 7,208.64

Dollar/yen: UP at 136.00 yen from 135.69 yen Monday

Euro/dollar: DOWN at $1.0400 from $1.0431 

Pound/dollar: DOWN at $1.2068 from $1.2116

Euro/pound: UP at 85.09 pence from 86.09 pence

West Texas Intermediate: UP 1.7 percent at $110.26 per barrel

Brent North Sea crude: DOWN 0.4 percent at $113.00 per barrel

New York – Dow: Closed for public holiday