SAS Chapter 11 Plan Gets Green Light, Ensuring Uninterrupted Service for Travelers

Wednesday, March 20, 2024

SAS has announced the approval of its Chapter 11 Plan by the U.S. Bankruptcy Court for the Southern District of New York. The implementation of this plan is pending certain conditions, such as regulatory approvals and the finalization of a reorganization of the Swedish parent company, SAS AB. SAS anticipates exiting Chapter 11 proceedings by the latter half of 2024, with expectations set that there will be no financial return for junior creditors and no remaining value for the current shareholders of SAS AB. In relation to this, all of SAS AB’s ordinary shares and publicly traded hybrid bonds are projected to be annulled, repaid, and removed from listing as SAS completes the restructuring process. Despite these changes, SAS’s daily operations and flight schedules will continue as normal, ensuring uninterrupted service for its customers.

The initiation of Chapter 11 proceedings in the U.S. was a strategic move by SAS to fast-track the SAS FORWARD transformation plan, aimed at renegotiating with major stakeholders, restructuring debt, reorganizing its fleet, and securing substantial new capital.

Throughout the Chapter 11 process, SAS has successfully restructured its fleet and amended lease agreements for 59 aircraft with 15 leasing companies. These agreements are expected to yield annual savings of at least SEK 1 billion in leasing and related financing costs.

Moreover, SAS has completed a competitive process for exit financing, choosing a consortium led by Castlelake, L.P., Air France-KLM, Lind Invest, and the Danish government as the preferred bidders. This arrangement will inject USD 1,200 million into the reorganized SAS, comprising USD 475 million in new equity and USD 725 million in convertible secured debt.

The Chapter 11 Plan received overwhelming support from creditors, with more than 99% in favor.

Anko van der Werff, President & Chief Executive Officer of SAS, comments:

“This is a major milestone for SAS in our transformation plan, SAS FORWARD. The approved Chapter 11 Plan is supported by more than 99 percent of our creditors that voted, and 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. I would like to thank our investors and our other stakeholders who have worked constructively with us in reaching this milestone, and our creditors for their confidence in our plan. I would also like to thank our employees for their dedication and determination throughout this process. We still have work to do but this marks a powerful step towards realizing SAS’ potential to remain at the forefront of the airline industry for years to come.”

The successful implementation of the Chapter 11 Plan remains contingent on meeting specific prerequisites, including necessary regulatory consents and the successful reorganization of SAS AB in Sweden. SAS reinforces its stance that there will be no financial recovery for subordinate creditors and no value retention for existing SAS AB shareholders, with all ordinary shares and listed hybrid bonds of SAS AB expected to be revoked and delisted following the restructuring.

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