The European Commission has approved Scandinavian Airlines' (SAS) €1.3bn ($1.4bn) restructuring aid plan, the Swedish airline said on June 28, 2024.
""The European Commission has today declared the Kingdom of Denmark's and the Kingdom of Sweden's participation in SAS' restructuring process compatible with applicable EU State aid rules,"" SAS read in a statement. ""The approval marks another step forward for SAS in its transformation plan and in the on-going restructuring proceedings.""
The European Commission said the measure will enable the company to restore its long-term viability while minimising competition distortions.
""The restructuring aid to SAS approved today will contribute to ensure air connectivity to and from Scandinavia to the benefit of European citizens. Our assessment showed that SAS’ restructuring plan will ensure its viability in the long term,"" said European Commission executive vice president in charge of competition policy Margrethe Vestager.
In its assessment, the Commission said the aid contribute to the development of air transport within, to and from, Scandinavia and supports the market. It added that the aid would tackle the ""main reasons"" for SAS' financial difficulties, in particular with reducing its indebtedness. With SAS making its own contributions of around €4.1bn ($4.39 bn) - primarily in the form of new equity and new convertible debt - the aid was considered proportionate.
In addition, the aid comes with safeguards to limit distortions of competition in the single market. These safeguards include SAS reducing its presence in the overall air transport through a reduced fleet, divestment of assets, and the release of a significant number of slots.
Vestager added: ""To limit any possible distortions triggered by the public support, SAS will reduce its presence on the overall air transport activities through, among others, a reduced fleet, limited ground handling and maintenance business as well as the release of several slots.""
Earlier in the week, SAS Group and its subsidiaries including Scandinavian Airlines submitted its monthly reports from November 1, 2023, through to May 31, 2024, to the US bankruptcy court as part of the voluntary Chapter 11 process. For the period, its consolidated revenues were at $2.18 million, with its net losses at $376 million as of the end of May. Its total assets were at $5.5 million, and its total liquidity was at $6.56 million.
In October 2020, the EU Commission approved, under the COVID-19 temporary framework, a recapitalisation of SAS amounting to approximately €833 million ($892.18 million) by Denmark and Sweden. Following the annulment by the general court, the recapitalisation was approved again in November 2023.
Despite the support, SAS did not manage to turn operations around and had to file for chapter 11 plan of reorganisation at the US bankruptcy court for the southern district of New York on July 5, 2022. As a result, SAS had to reorganise its business and Sweden and Denmark submitted to the EU Commission a restructuring plan supported with state aid. SAS had announced its plan of reorganisation on June 10, 2024.
The hearing and vote on the plan of reorganisation will take place on July 12, 2024, at the Stockholm District Court.
Weil, Gotshal & Manges is serving as global legal counsel and Mannheimer Swartling Advokatbyra is serving as Swedish legal counsel to SAS. Seabury Securities and Skandinaviska Enskilda Banken are serving as investment bankers, and Seabury Securities is also serving as restructuring advisor to SAS.
SAS' $1.4bn restructuring plan approved by European Commission
