Shares in SAS tumbled 95% at market open on Wednesday after the Scandinavian airline announced new significant shareholders late on Tuesday in a restructuring that will see the group delisted from bourses and existing ownership stakes erased. The airline’s stock plunged almost as far as the low end of a trading range it had set for the day.
The airline, which was already loss-making before the pandemic erupted and lost market share to low-cost rivals like Norwegian Air and Flyr, posted a $48 million loss in November on $270 million in revenue, according to a monthly filing with U.S. bankruptcy court. The loss was narrower than a $90 million loss in October and a nearly $90 million in September, but analysts said it would be difficult for the airline to make up for those losses this year.
The airline’s creditors approved the new plan in a meeting held in Copenhagen on Tuesday. It will require a significant capital injection, with the airline expected to raise at least SEK9.5 billion in 2023. SAS said a restructuring committee has been appointed to manage the process, and a deal structure is expected to be completed in the first quarter of 2023. The company’s chief executive, Anko Van der Werff, will continue to run the airline as a debtor in possession with its current employees and management team.
SAS will return ten of its aircraft to lessors, reducing the number to 108 from 42 in February, data from aviation consultancy Cirium Fleet Analyzer shows. The airline also plans to sell off its remaining planes and jet fuel. In addition, it plans to exit the Star Alliance in favor of the SkyTeam network that Air France-KLM is part of, although that will only happen after a series of approvals.
Castlelake, which manages around $22 billion in assets, is taking an 8.6% stake in the airline alongside the Danish state, which holds 8.1%, according to the airline. Denmark’s sovereign wealth fund, Pension Fund Invest, is taking another 2.4%, while the airline’s former owner, Wallenberg Investments, will hold 0.8%, according to LSEG data.
The airline said it will use the sale proceeds to pay most of its unsecured creditors, which are expected to receive at least 75% of their claims in cash and the rest in equity, assuming a complete plan is successfully implemented and approved by the courts. However, amounts payable to subordinated unsecured creditors are expected to be significantly lower. The transaction is subject to approval by the U.S. bankruptcy court for the Southern District of New York, several regulatory authorities, and other conditions. SAS AB must file a disclosure statement and Chapter 11 plan with the U.S. court by the end of the month. Until that time, negotiations with stakeholders will continue. Weil, Gotshal & Manges LLP serves as global legal counsel, and Mannheimer Swartling Advokatbyr AB is Swedish legal counsel for the airline. Seabury Securities LLC and Skandinaviska Enskilda Banken AB serve as investment bankers and FTI Consulting as financial advisors.