Summary
- Scandinavian Airlines (SAS) secures $1.2 billion investment and refinancing loan, marking significant progress in its restructuring efforts.
- Winning bidders, including Air France-KLM, Lind Invest, and the Danish state, increase their planned investment by $25.26 million.
- SAS goals to secure US Court approval for the investment agreement and fresh financing in November 2023, while potentially transitioning from the Star Alliance to the SkyTeam Alliance.
Scandinavian Airlines (SAS) has revealed significant progress in its restructuring efforts. The airline secured a $1.2 billion investment from a consortium backed by Air France-KLM while also finalizing a debt-in-possession refinancing loan from Castlelake.
In response to the airline, the group of winning bidders, which incorporates Air France-KLM, Lind Invest, and the Danish state, increased their planned investment by $25.26 million. Moreover, the airline will get a $500 million credit agreement from Castlelake to repay its loans, boost its available funds, and help it move forward from the voluntary restructuring process.
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In an announcement, Anko van der Werff, President and chief executive officer of SAS, said:
“By moving into this investment agreement, SAS is taking the subsequent step in its chapter 11 process within the US. The investment is a key milestone in our SAS FORWARD plan, and it shows that our latest investors consider in SAS and our potential to stay on the forefront of the airline industry for years to come back.”
The airline is currently aiming to secure US Court approval for the investment agreement and the fresh debtor-in-possession financing on the earliest opportunity in November 2023.
Restructuring process and latest ownership
Within the wake of several challenges, SAS took the step of looking for Chapter 11 bankruptcy protection in July 2022. Since that point, the airline has been pursuing funding to support its “SAS Forward” initiative, geared toward optimizing its business operations and enhancing its financial standing.
Although SAS initially aimed to finish this process inside a yr, it has encountered delays, even after securing $700 million in debtor-in-possession funding from the private equity firm Apollo Global Management.
Amid this restructuring process, various stakeholders have intervened, altering each the airline’s trajectory and ownership structure. Although, Apollo was the favourite to win the bid, the American private equity firm Castlelake emerged because the surprise winner. Currently, SAS is under the ownership of Castlelake (32%) along side Air France-KLM (20%) and the Danish state (26%).
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In response to the newly disclosed ownership in October 2023, Air France-KLM CEO Benjamin Smith said:
“Air France-KLM looks forward to establishing strong business ties with SAS. With its well-established position in Scandinavia and robust brand, SAS offers tremendous potential to Air France-KLM. This cooperation will allow Air France-KLM to boost its position within the Nordics and improve connectivity for Scandinavian and European travelers.”
With the involvement of Air France-KLM, SAS is anticipated to transition from its founding membership within the Star Alliance to becoming a component of the SkyTeam Alliance. The move would mean that Frankfurt-based Star Alliance would lose a key partner in Northern Europe to its direct rivals, strengthening its position on the continent.
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