Sunday, July 21, 2024

European Union approves €1.3 billion restructuring aid for SAS .

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The European Commission (EC) has approved the restructuring plan of Scandinavian Airlines, stating that it complies with EU state aid regulations.

 

This allows the Danish and Swedish governments to participate in the restructuring plan. The restructuring is subject to certain prerequisites including approval by relevant authorities and completion of restructuring procedures in Sweden.

 

Margrethe Vestager, the EU’s Executive Vice-President in charge of competition policy, said :

“To limit any possible distortions triggered by the public support, SAS will reduce its presence on the overall air transport activities.

This could be through, “among others, a reduced fleet, limited ground handling and maintenance business as well as the release of several slots”, she said.

 

In February 2024, Scandinavian Airlines (SAS) had filed a second amended Chapter 11 reorganisation plan, which will see a recovery of around $325m for general unsecured creditors and aims to see the company emerge from the process in mid-2024. 

 

The plan, filed with the US Bankruptcy Court for the Southern District of New York, came after the airline gained the support of the Official Committee of Unsecured Creditors and could see the company emerge from the process after filing for bankruptcy protection in mid-2022. 

 

The Chapter 11 initiation was voluntary, aiming to expedite SAS Forward, its overarching business transformation strategy. The process aimed to reach agreements with key stakeholders, restructure debt obligations, reconfigure the fleet, and emerge with a significant capital injection.

 

In particular, SAS renegotiated leases with 15 lessors for 59 aircraft, anticipating annual cost savings of at least SEK1 billion kronor (USD95.5 million).

 

While the Franco-Dutch firm — Air France-KLM holds just a 19.9% equity stake for now, there is a definite shift in partnerships. Along with organizational changes, the airline is defecting from the Star Alliance to better align with its new partners. 

 

Scandinavian Airlines will receive investment from a consortium including Air France-KLM and will join SkyTeam in September. SAS will remain in Star Alliance until August 31. From September 1, SAS says customers will start enjoying benefits “with most SkyTeam airlines.” 

 

As per Norwegian news agency NTB and newspaper Dagens Næringsliv, SAS may face a SEK270 million (USD25.8 million) “exit fee” when leaving Star Alliance, a necessary consequence of its new part-owners Air France-KLM belonging to the competing Skyteam.

 

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