SAS Scandinavian Airlines (SK, Copenhagen Kastrup) has triggered an attempt to raise equity financing while admitting that there will be little recompense for the debts incurred to existing creditors when it emerges from its Chapter 11 bankruptcy proceedings in the United States.

The embattled carrier said on April 6 that it had initiated “a process to solicit equity investment in the reorganised SAS” as part of the Chapter 11 proceedings, whereby “potential investors can place bids to take a lead position or be paired with other investors in acquiring equity interests” of the airline.

SAS said in late May 2022 that it needed a new capital injection of SEK9.5 billion kronor (USD911 million). Now, however, it says that the final amount raised “will depend on the competitive equity raise process along with the company’s ongoing ability to generate additional liquidity.” Flight operations will continue as usual throughout the process, it added.

However, given that it faces around SEK20 billion (USD1.92 billion) in claims, combined with the need for substantial new equity capital, SAS said it “expects that there will be only modest recovery for general unsecured creditors and little or no recovery for subordinated unsecured creditors” on emergence from Chapter 11. As for existing shareholders - SAS’s biggest owners are the Swedish and Danish governments, holding a 21.8% stake each - given that they are lower in priority of payment in relation to creditors, there will be nothing or very little of value left for them, it said.

SAS also revealed renewed financial projections. It expects revenues to return to pre-pandemic levels in the year ending December 31, 2024, and reach about SEK58 billion (USD5.56 billion) in 2026, higher than the SEK49 billion (USD4.7 billion) envisaged for that year last September. Under the updated projections, the level of liquidity for 2023 “is expected to significantly exceed” the previously expected 15%.

The airline said that it had concluded talks with lessors in January, having reached agreements with 15 of them representing 59 aircraft. Through amended lease agreements, SAS said it had achieved annual cost savings exceeding SEK1 billion (USD96 million), savings which will be reflected in the company’s financial results after it emerges from Chapter 11.

A hearing for the approval of the equity financing at the Bankruptcy Court for the Southern District of New York has been set for the morning of April 19, and any objections to the motion must be expressed no later than 1600L (2000Z) on April 12, according to a separate legal notice issued on April 5.