SAS Scandinavian Airlines Set for Chapter 11 Exit Mid-2024 as US Court Approves Plan

SAS Scandinavian Airlines is poised to emerge from Chapter 11 bankruptcy protection by mid-2024, following the green light from a US Bankruptcy Court in New York for its restructuring plan. This significant step forward is contingent on fulfilling various conditions, including securing regulatory approvals and restructuring efforts at the Swedish company level, SAS AB.

The airline’s restructuring plan includes comprehensive measures that will lead to the cancellation, redemption, and delisting of common shares and commercial hybrid bonds, directly impacting subordinated creditors and current shareholders, who will not receive any returns.

Initiated voluntarily, the Chapter 11 process was aimed at fast-tracking the SAS Forward strategy, a broad transformation initiative designed to renegotiate stakeholder agreements, restructure debt, reconfigure the fleet, and ensure a substantial capital infusion. Notably, SAS successfully renegotiated leases for 59 aircraft with 15 lessors, projecting annual cost savings of at least SEK1 billion (approximately USD95.5 million).

The restructuring plan also culminated in a competitive exit financing process, resulting in a new ownership consortium. This group includes Castlelake, Air France-KLM, Lind Invest, and the Danish state, collectively committing to invest USD1.2 billion in the reorganized airline. This investment is divided between USD475 million in new unlisted equity and USD725 million in secured convertible debt. The proposal has garnered overwhelming support from creditors, with a 99% approval rate.

Anko van der Werff, SAS President and CEO, hailed the court’s approval as a pivotal milestone in the airline’s transformation, expressing optimism about SAS’s future as a competitive and financially robust carrier with a stable equity structure.

However, the transition might involve significant costs, including a potential SEK270 million (USD25.8 million) “exit fee” for leaving the Star Alliance due to the new part-ownership by Air France-KLM, a Skyteam member. Additional expenses are anticipated for advisory and legal services incurred throughout the US restructuring process, potentially amounting to billions of kronor.

SAS’s departure from the Star Alliance, which it co-founded in 1997, is expected to commence in early 2024, aligning with the final phases of its Chapter 11 exit strategy. This marks a new chapter for SAS as it seeks to reposition itself within the global aviation landscape, supported by a revised ownership and financial framework conducive to its long-term success and competitiveness.