SAS Scandinavian Airlines To Remain In Bankruptcy Protection Until Next Year

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1 year ago

Summary

Scandinavian Airlines (SAS) has been granted a 100-day extension on its bankruptcy protection, allowing more time to solicit equity and devise a restructuring plan.
SAS says its efforts to acquire financing have been promising, with multiple first-round bids and ongoing discussions with potential investors.

Scandinavian Airlines (SAS) will remain under bankruptcy protection until next year following a New York bankruptcy court order earlier this month. The airline will have until January 8th, 2024, to develop a viable restructuring plan.

SAS gets bankruptcy extension

As reported by ch-aviation, US Bankruptcy Court judge Michael E. Wiles granted a 100-day extension to SAS’ Chapter 11 bankruptcy protection, arguing that the decision was “in the best interests of the debtors, their estates, their creditors, and all parties in interest.” The additional time will give SAS more time to solicit equity and devise a restructuring plan.

Photo: Vincenzo Pace I Simple Flying

This is the second extension SAS has been granted following an earlier decision in April. The Scandinavian carrier had initially hoped to exit bankruptcy proceeding this year, but ultimately filed for an extension this summer, giving it exclusivity until January next year. SAS filed for bankruptcy protection in July 2022 and is implementing its ‘SAS FORWARD’ transformation plan, which aims to reduce annual costs by $800 million.

Progress going well

According to an official committee of unsecured creditors, efforts to acquire financing have “yielded very promising results,” with SAS receiving multiple first-round bids in July. SAS claims it has contacted “hundreds of potential investors” and that discussions are ongoing – bidders will have to submit their final proposals by September 18th.

SAS continues to trim costs and raise capital wherever possible, including renegotiating aircraft leases and selling equipment, such as four engineless Airbus A321s sold to Spectre Air Capital this week.

Performance better than expected

There is plenty of cause for optimism at SAS as the airline’s good performance continues. Its load factors have been steadily rising this year – reaching 86% in July – and the carrier has projected a return to profitability in 2024.

In June, SAS posted a monthly profit for the first time in 2019, a sign things are moving in the right direction. The airline then carried 2.4 million passengers in July, an 82% increase year-on-year and its highest total since the pre-pandemic era. SAS upped its capacity for the summer and launched several new routes, including flights to Bangkok and additional routes to Newark.

Photo: Markus Mainka | Shutterstock

SAS President & CEO Anko van der Werff commented,

“The summer season continued with another busy month for SAS. 2.4 million passengers traveled with SAS in July, the highest passenger figure since before the pandemic. We are pleased to see the positive trend for passenger demand, with continued booking strength throughout the month of July.”

In August 2022, SAS revealed it would seek to raise $700 million in DIP financing in two tranches to negotiate its Chapter 11 process. However, following a stronger-than-expected financial performance in the second fiscal quarter of this year, the carrier has opted not to draw down the second tranche of financing.

Have you flown with Scandinavian Airlines (SAS) this year? How does today’s SAS compare to previous years? Let us know in the comments.

Source: ch-aviation

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