Summary
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SAS received a victory in a US bankruptcy court, allowing them to receive a $450 million loan and settle existing debts.
- Despite this victory, SAS still faces financial challenges.
- SAS recently secured significant outside investment and is heading in the right direction to recuperate from its financial difficulties, but long-term solutions are crucial.
On 9 November 2023, Scandinavian flag carrier SAS received a victory in a US bankruptcy court today when a judge ruled that the carrier can receive a loan of $450 million from multiple parties, including Minneapolis-based investment firm Castlelake. Because the airline is currently undergoing restructuring efforts, this ruling comes as a giant victory and bodes well for the struggling carrier’s future.
Currently, asset management firm Apollo Global Management controls a significant slice of SAS’s debt, and the recently approved loan will allow the airline to settle existing balances with Apollo. Nonetheless, there continues to be an uphill road for SAS to return to a sound financial state, and an investment within the airline stays an uncertain alternative.
SAS’s financial situation
In 2022, the Scandinavian flag carrier SAS filed for bankruptcy protection, citing severe financial difficulties and unexpectedly weak money flow. While the airline had initially survived the primary blow from the COVID-19 pandemic, it appeared that the carrier was unable to enhance its financial situation within the years that followed.
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Because of this of the bankruptcy protection, SAS was to develop a radical restructuring plan, which it will definitely named because the “SAS FORWARD” transformation plan. Central to this plan was the streamlining of operational costs, and the carrier aimed to lower total costs across the board by nearly $800 million annually, a hefty margin for such an airline. Many doubted the SAS’s ability to perform this feat, as this required a big overhaul of the carrier’s operational strategy, something that might prove very difficult.
Within the early months of 2023, it looked as if SAS was going to have the opportunity to attain its objective, with multiple different transformation plans recommend. The carrier had also indicated that it had tons of of investors onboard and that bids were to be finalized by mid-September.
SAS’s Bankruptcy Protection ExtensionNonetheless, this didn’t occur, as SAS ultimately filed for an extension to its bankruptcy protection. Ultimately, the airline was granted protection until January 2024, but given today’s news, the longer term will not be as bleak as had been anticipated.
So what next?
Last month, SAS announced that it had secured significant outside investment from a consortium of European and American shareholders, including Air France-KLM, a significant conglomerate on the continent. Joining the European airline group are the Danish government and Danish capital company Lind Invest ApS. The quantity negotiated was set to be in excess of $1.21 billion.
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With the carrier’s loan set to be paid out between 15 and 17 November, it seems that the legacy carrier is well on its way towards recovering from its financial difficulties. Nonetheless, challenges remain, and the airline might want to create long-term solutions to the systematic financial issues that led to the carrier’s bankruptcy in the primary place. The airline’s court proceedings have also not concluded, with the identical bankruptcy court expected to carry a final hearing to approve the carrier’s restructuring plan on 21 November.