This airline is no longer officially bankrupt

While a bankruptcy filing is often the beginning of the end, there are also situations where airlines are able to restructure their debt and emerge with a better profitability plan.

When the struggling airline is the flagship carrier for a small country, creditors and the government are eager to help keep the airline afloat. After Air Vanuatu abruptly canceled all flights and filed for bankruptcy in May, liquidators Ernst & Young began working out a recovery plan with the government of the small South Pacific nation.

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In 2022, Copenhagen-based Scandinavian Airlines (the working name is abbreviated to SAS) filed for Chapter 11 bankruptcy protection in New York after struggling to recover from declining sales during the Covid-19 pandemic. In total, he has amassed more than $2 billion in debt.

CEO: Restructured debt puts airline in ‘much stronger position’

On August 28, the airline announced that it had restructured its debt and could officially declare that it had officially emerged from bankruptcy proceedings.

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The restructuring process involved splitting the main ownership between Castlelake, Air France-KLM (AFRICAN) Lind Invest and the government of Denmark (and thus delisted SAS earlier this month), moving its codeshare network from Star Alliance to SkyTeam and receiving more than $1.2 billion (475 million dollars in new unlisted shares and $725 million in convertible secured debt) from new investors.

“This is truly a new era for SAS, with a much stronger position, lower debt and lower costs,” SAS CEO Anko van der Werff told Reuters. Kåre Schultz, who was previously CEO of pharmaceutical giant Novo Nordisk (NGOs) was appointed as the chairman of the board of directors overseeing the investors.

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SAS promises a new, financially sound future (will it deliver?)

The airline released a new statement, saying it had emerged from the proceedings as “a competitive and financially robust airline with a strong capital structure”.

The plan, which has been approved by both the US and European Union governments, also allows Air France-KLM to acquire a stake of more than its current 20% in the company after a period of two years. The next steps, van der Werff said, involve continuing to expand the airline to better protect it from financial downturns in the future.

According to the figures provided, 18 million passengers traveled with SAS in the period to the end of July 2024. This is an increase of 6.5% compared to the same period last year. The total cost reduction, which also involved reworking the airline’s flight network, amounted to around SEK 7.5 billion.

“Efforts that made it possible to save and restart one of Scandinavia’s best companies,” van der Werff added. “Now we must look to the future and complete the transformation we have started, continue our commitment to net zero emissions by 2050 and take advantage of the opportunities in a growing market.”

As part of its network expansion plan, SAS earlier this year announced new routes to smaller Scandinavian cities such as Tromsø and Luleå, as well as international holiday destinations such as Ibiza in Spain and Tivat in Montenegro.