STOCKHOLM (REUTERS) - Hundreds of SAS flights were cancelled on Thursday (July 7) as the airline wrestled with a strike by pilots at its main SAS Scandinavia arm, overshadowing a traffic surge during June.

Talks between the airline and pilots over a new collective bargaining agreement collapsed on Monday, prompting a strike which adds to travel chaos in Europe and deepens the financial crisis at SAS, which estimated it would ground half its flights.

The troubled airline, whose biggest owners are the Swedish and the Danish states, filed for Chapter 11 bankruptcy protection in the United States on Tuesday. The first hearing was due to begin at 1400 GMT (10pm Singapore time) in New York with SAS expecting the process to take between nine and 12 months.

Tuesday's traffic figures highlighted what SAS was now missing in the peak summer period, with the airline flying 1.9 passengers in June, a 220 per cent increase on the year.

Data from flight tracker FlightAware showed 202 flights, 66 per cent of the airline's daily total, were cancelled on Thursday.

"The notice of strike from the SAS Scandinavia pilots' unions started impacting our bookings toward the end of the month," SAS CEO Anko van der Werff said in a statement.

"We continue our SAS FORWARD restructuring plan in which all stakeholders need to participate in order to secure SAS' financial stability."

SAS, which has struggled for decades with a high cost base relative to low-fare rivals in Europe, has said the strike will cost it US$10 million (S$14 million) to US$13 million per day and had accelerated its decision to seek bankruptcy protection.

SAS has said the move will help it accelerate restructuring plans, including deep cost cuts, announced in February.

The striking pilots have said they would consider pay cuts, but cannot accept SAS hiring new pilots through two new subsidiaries, under what unions say are worse terms.