Scandinavian Airlines Clears US Chapter 11 Bankruptcy

Scandinavian Airlines (SAS) has successfully emerged from a two-year restructuring process and announced its exit from US Chapter 11 bankruptcy proceedings. CEO Anko van der Werff described this development as marking the start of  "a new era" for the airline. 

The restructuring, which began in July 2022, involved a comprehensive overhaul of SAS's financial and operational structures. The airline restructured over $2 billion in debt and adjusted its fleet to better meet current market demands. This process also included delisting its stock, which resulted in the loss of stakes for more than 250,000 former shareholders. Despite these challenges, van der Werff emphasized that SAS now has "a much stronger position, lower debt, and lower cost," which are essential for its future success.

As part of the restructuring, SAS secured a total investment of US$1.2 billion, consisting of US$475 million in new unlisted equity and US$725 million in secured convertible debt. The new principal owners of SAS include Air France-KLM, hedge fund Castlelake, investment manager Lind Invest, and the Danish government.

The restructuring process took longer than initially anticipated. While SAS had forecasted that the Chapter 11 proceedings would take between nine and 12 months, the timeline was revised several times.

Air France-KLM, which now holds a 19.9% stake in the airline, is expected to bolster SAS's presence in the Scandinavian market. There is potential for Air France-KLM to increase its stake and become a controlling shareholder after a minimum of two years, subject to regulatory conditions and financial performance. As part of this collaboration, SAS will transition its customer loyalty program to SkyTeam, of which Air France-KLM is a leading member, effective Sep. 1, 2024. This change will expand the range of destinations available to SAS customers through codeshares with other SkyTeam members.

"Now, we must look ahead and complete the transformation that we have started," said Anko van der Werff, CEO, SAS.

The airline's operational performance has also shown significant improvement. SAS reported its highest-ever monthly profitability in July 2024, reflecting the impact of ongoing cost-cutting measures. These efforts are part of the SAS FORWARD restructuring plan, which aims to achieve annual cost reductions of approximately SEK7.5 billion (US$0.74 billion).