SAS Exits U.S. Chapter 11 Bankruptcy

By Terje Solsvik and Marie Mannes

OSLO (Reuters) – SAS announced on Wednesday the successful exit from U.S. Chapter 11 bankruptcy proceedings. The Scandinavian airline’s CEO heralded a “new era” characterized by a stronger balance sheet and new ownership.

The Sweden-based SAS restructured over $2 billion in debt, adjusted its fleet, and delisted its stock, leading to the loss of stakes for over 250,000 former owners.

“This is truly a new era for SAS with a much stronger position, lower debt, and lower cost,” SAS CEO Anko van der Werff told Reuters. He noted the airline’s strong operational performance in the recent summer season.

Ongoing cost reductions contributed to SAS posting its highest-ever monthly profitability in July, and the airline sees growth opportunities in the market, although it did not disclose further earnings details.

“Now, we must look ahead and complete the transformation that we have started,” van der Werff added.

The airline sought bankruptcy protection in July 2022 after struggling with high costs and low demand, culminating in a court-approved plan making Air France-KLM, hedge fund Castlelake, investment manager Lind Invest, and the Danish government its new owners.

Initially, SAS had projected the restructuring process would take between nine to twelve months, but this timeline was revised several times.

Air France-KLM will hold a 19.9% stake in SAS at first, enhancing its footprint across Sweden, Denmark, and Norway. The French-Dutch group could potentially increase its stake to become a controlling shareholder after a minimum of two years, contingent on regulatory approvals and financial performance.

SAS plans to transition its customer loyalty program to SkyTeam, led by Air France-KLM, from Star Alliance, which includes Lufthansa and United Airlines, starting next month.

“SAS, Air France, and KLM customers will now have access to a larger number of destinations via codeshares,” stated Air France-KLM CEO Benjamin Smith.

SAS exits the bankruptcy proceedings with a total investment of $1.2 billion, which includes $475 million in new unlisted equity and $725 million in secured convertible debt.

Regional rival Norwegian Air experienced a similar restructuring from 2020 to 2021, emerging with a more streamlined fleet and reduced debt.

Additionally, SAS reached a wage agreement with its Norwegian cabin crew on Tuesday, putting an end to a labor strike over pay and working conditions, which the airline noted would support its operations.