SAS Exits Chapter 11: What $1.2 Billion and a SkyTeam Switch Mean for Travelers

With $1.2 billion in new investment, including from Air France-KLM and the Danish government, and a ground-up restructuring, Scandinavian Airlines (SAS) has emerged from bankruptcy proceedings into what the CEO called a “new era.”

The Copenhagen-based airline has “a much stronger position, lower debt, and lower costs,” boss Anko van der Werff told Reuters as the company exited Chapter 11 bankruptcy protection this week.

New Investment and Ownership Changes

Under a court-approved plan, Franco-Dutch aviation group Air France-KLM has taken a 19.9 percent stake in the Scandinavian carrier, with the option to raise its stake and become a controlling shareholder after at least two years.

Air France hopes to use SAS to increase its Nordic presence and will link SAS flights with its main airlines in its Amsterdam (AMS) and Paris (CDG) hubs.

Photo: Anko van der Werff, SAS CEO. Courtesy of SAS

In total, Air France-KLM and other new owners henge fund Castlelake, investment manager Lind Invest, and the Danish state have injected $1.2 billion of fresh investment into the company, including $475 million of new unlisted equity and $725 million in secured convertible debt.

SAS has previously been publicly traded in Stockholm, Copenhagen, and Oslo exchanges. The stock was delisted earlier this month, wiping out the stakes of 250,000 investors.

Transition and Restructuring

As part of the bankruptcy procedures, SAS has restructured more than $2 billion of debt, reached agreements with key creditors, vendors, and stakeholders, and reorganized and simplified its fleet.

Over the last few years, the airline has retired all but one of its Boeing 737s in favor of new Airbus A320neo family jets. SAS is currently in the market for additional widebody jets, which it says will be either Airbus A330s or A350s.

Photo: Courtesy of SAS

Van der Werf thanked airline staff, partners, and creditors for “efforts that made it possible to save and restart one of the finest companies in Scandinavia.”

SAS filed for Chapter 11 bankruptcy in U.S. courts in July 2022. Already wounded by the pandemic, the airline has been hit by high fuel costs and a pilot strike.

Two years later, it’s benefiting from a much stronger market for travel. 18 million passengers have boarded SAS flights so far in the 2024 fiscal year (November 2023-July 2024), a 6.5 percent increase over the same period in 2023.

SAS said it has also slashed costs, making “steady progress” on its goal of reducing its annual spending by SEK 7.5 billion ($731.6 million).

Cost reductions are part of an ambitious post-bankruptcy transformation plan for the business, dubbed “SAS FORWARD.” Under the plan, the airline will optimize its network and fleet, strive to compete with rivals on per unit cost, and fly more sustainably.

“Now, we must look ahead and complete the transformation that we have started, continue our commitment to achieving net-zero emissions by 2050, and take advantage of the opportunities in a growing market,” van der Werf said.

The plan is already paying dividends. Lower costs and strong operational performance boosted SAS’s monthly profitability to its highest level yet in July.

Alliance Swap

Meanwhile, as part of its alignment with Air France-KLM, SAS will exit Star Alliance on August 31 and officially join rival SkyTeam the following day. Eight million members of its EuroBonus will enjoy benefits on most SkyTeam airlines, including Aeromexico, China Eastern Airlines, Delta Air Lines, Korean Air, and Virgin Atlantic from that day.

Photo: Courtesy of SkyTeam

SAS has already realigned its network to take advantage of these SkyTeam partnerships, especially with Delta. In June, the carrier launched a link between Copenhagen (CPH) and Delta hub Atlanta (ATL), a flight that will operate daily during the summer and five times weekly over the winter.