SAS secures $1.2 billion injection from consortium to fund restructuring

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Scandinavian carrier SAS has reportedly secured an investment of 13.2 billion Swedish Crowns ($1.21 billion) to aid its restructuring following a turbulent few years.  

The cash is being made available to SAS by way of a loan from a consortium that includes Castlelake, a major shareholder in the airline. The loan effectively replaces a debtor-in-possession financing arrangement provided by Apollo Global Management in 2022. 

The consortium agreeing to put up the cash injection also includes the Air-France-KLM Group, alongside Lind Invest and the Danish state, the latter agreeing to increase its investment in the airline by a further $25.26 million.  

In October 2023, SAS announced Castlelake had agreed to take a stake in the carrier amounting to around 32%, while Air France-KLM would take 20% and the Danish state around 26%. In real terms, the total amount being invested in the operator equates to $1.16 billion. 

The credit agreement reached with Castlelake, valued at $505.25 million, will primarily be used to refinance loans, increase the airline’s liquidity, and facilitate its exit from the voluntary restructuring proceedings, which it entered last year amid mounting losses in a bid to cut costs.  

Since it entered bankruptcy, the carrier has been aggressively pursuing a cost-cutting strategy known as “SAS Forward”. The aim of the program is to streamline business operations, cut costs, and enhance the company’s overall financial position.  

On announcing the significant financial injection plan, SAS’s Chief Executive, Anko van der Werff, said: “By entering into this investment agreement, SAS is taking the next step in its Chapter 11 process in the US.” 

The company will now seek approval from the US Court for the investment agreement and the new debtor-in-possession financing as soon as possible and hopes to obtain the clearance it requires from the Court during November 2023.  

The Pan-Scandinavian carrier filed for Chapter 11 bankruptcy protection in the United States in July 2022 following several years of financial struggles. 

Subsequently, to shore up its financial stability during the Chapter 11 process, SAS entered into an agreement with US-based investment fund Apollo Global to raise $700 million of fresh financing in September 2022.  

Since the end of the pandemic, which saw the airline being crippled with debt while passenger numbers collapsed, the airline has also faced industrial action from its pilot workforce, been hit by IT security breaches and a cyber-attack in which hackers demanded $175,000 and has returned several aircraft in its fleet to lessors.  

The carrier will be hoping that this latest round of investment will prove to be something of a turning point in the airline’s fortunes. With the carrier also planning its transition from the Star Alliance to the Air-France-KLM SkyTeam alliance shortly, SAS is heading down a new path, which its shareholders will hope marks the beginning of a fresh start for the beleaguered carrier.  

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