SAS Scandinavian Airlines (SK, Copenhagen Kastrup) expects to emerge from Chapter 11 bankruptcy protection by mid-2024 now that the US Bankruptcy Court in New York has greenlit the carrier's restructuring plan.
Despite this approval, on March 19, the plan's execution still hinges on meeting several conditions, including regulatory nods and restructuring SAS AB at the Swedish company level, the airline said in a statement.
It also underscored that subordinated creditors and current SAS shareholders would not see any returns, with common shares and commercial hybrid bonds slated for cancellation, redemption, and delisting as the airline emerges from restructuring.
The Chapter 11 initiation was voluntary, aiming to expedite SAS Forward, its overarching business transformation strategy. The process aimed to reach agreements with key stakeholders, restructure debt obligations, reconfigure the fleet, and emerge with a significant capital injection. In particular, SAS renegotiated leases with 15 lessors for 59 aircraft, anticipating annual cost savings of at least SEK1 billion kronor (USD95.5 million).
In addition, a competitive exit financing solicitation process was concluded with a new owner consortium comprising Castlelake (on behalf of certain funds and affiliates), Air France-KLM, Lind Invest, and the Danish state, which will invest USD1.2 billion in the reorganised airline split between USD475 million in new unlisted equity and USD725 million in secured convertible debt. The carrier noted that an overwhelming number of creditors (99%) supported the exit plan.
"This is a major milestone for SAS in our transformation plan," SAS President and CEO Anko van der Werff commented. "It sets a clear path to exiting the restructuring proceedings. We look forward to emerging as a competitive and financially stronger airline with a stable equity structure."
SAS may face a SEK270 million (USD25.8 million) "exit fee" when leaving Star Alliance, a necessary consequence of its new part-owners Air France-KLM belonging to the competing Skyteam, the Norwegian news agency NTB and newspaper Dagens Næringsliv reported. There will also be costs for advisors and lawyers engaged during the restructuring process in the US, which is estimated to run into billions of kronor, the reports said.
SAS would begin the alliance transfer in early 2024 as it moves closer to exiting Chapter 11, van der Werff has said. SAS co-founded Star Alliance in 1997.