Key Points:

  • SAS is approaching the conclusion of its restructuring, with a U.S. bankruptcy court sanctioning a $1.3 billion capital infusion.

  • Following Chapter 11 proceedings, SAS is set to forge a strong link with Air France-KLM and potentially shift to the SkyTeam alliance.

  • The investment will significantly alter SAS's ownership structure, with Castlelake acquiring 32%, and Denmark and Air France-KLM holding substantial shares.

SAS's Financial Rejuvenation and Court Approval for Investment

Scandinavian Airlines System (SAS) is on the brink of completing a substantial financial restructuring phase. A U.S. bankruptcy court has recently authorized a crucial billion-dollar capital injection to revitalize the airline. This development follows SAS’s move to seek protection from creditors in mid-2022 under Chapter 11 of the U.S. Insolvency Code. The process, aiming to rescue the financially troubled airline, is nearing a successful outcome.

SAS has received the go-ahead from the insolvency court for investments from a consortium comprising Air France-KLM, investment firms Castlelake and Lind Invest, and the Danish government. The total investment approved amounts to approximately 1.3 billion U.S. dollars, as announced by SAS. This significant financial boost is a key milestone in the airline's path to recovery.

Ownership Changes and Strategic Alliances Post-Restructuring

The completion of this transaction will result in a notable change in SAS’s ownership structure. Castlelake is set to acquire a 32 percent stake in SAS, while the Danish government and Air France-KLM will hold nearly 26 percent and almost 20 percent of the shares, respectively. In line with a statement from October, Air France-KLM retains the option to further increase its share in SAS in the future. This strategic realignment is expected to lead to SAS’s transition from the Star Alliance to the SkyTeam alliance, reflecting its closer ties with Air France-KLM.

For previous shareholders of SAS, particularly the Swedish state which chose not to partake in the rescue plan, the restructuring signifies a total loss, as their shares will become valueless. This transformation marks a new chapter for the airline, transitioning from Scandinavian ownership to a more diverse and international shareholder base. This shift is indicative of the changing landscape in the global airline industry, where collaborations and strategic alliances are increasingly shaping the future of airlines.