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BusinessSAS Files for Bankruptcy Protection in US to Push...

SAS Files for Bankruptcy Protection in US to Push Through Restructuring

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By Dominic Chopping

STOCKHOLM–SAS AB said Tuesday that it has filed for chapter 11 bankruptcy protection in the U.S. as it seeks to push through its comprehensive financial restructuring to cut costs and raise capital under the supervision of the U.S. court system.

Struggling with high debt and a lack of cash, SAS earlier this year launched plans to cut annual costs by 7.5 billion Swedish kronor ($725.2 million), convert around SEK20 billion of debt and hybrid notes into common equity and raise at least SEK9.5 billion in new capital.

The Scandinavian airline has also been hit by a pilot strike that started Monday and it expects around 50% of its daily scheduled flights to be cancelled, affecting around 30,000 passengers a day.

“SAS has… been preparing for the option to utilize court restructuring proceedings in order to address the company’s financial situation,” SAS Chairman Carsten Dilling said.

“The ongoing strike poses significant challenges to our ability to succeed with our transformation. The board has concluded that legal tools are required to make progress in our ongoing negotiations with key stakeholders, and ultimately to succeed in making SAS a competitive and financially strong business,” he said.

SAS said it expects to complete its court-supervised process in the U.S. in 9-12 months.

Write to Dominic Chopping at [email protected]

By Dominic Chopping

STOCKHOLM–SAS AB said Tuesday that it has filed for chapter 11 bankruptcy protection in the U.S. as it seeks to push through its comprehensive financial restructuring to cut costs and raise capital under the supervision of the U.S. court system.

Struggling with high debt and a lack of cash, SAS earlier this year launched plans to cut annual costs by 7.5 billion Swedish kronor ($725.2 million), convert around SEK20 billion of debt and hybrid notes into common equity and raise at least SEK9.5 billion in new capital.

The Scandinavian airline has also been hit by a pilot strike that started Monday and it expects around 50% of its daily scheduled flights to be cancelled, affecting around 30,000 passengers a day.

“SAS has… been preparing for the option to utilize court restructuring proceedings in order to address the company’s financial situation,” SAS Chairman Carsten Dilling said.

“The ongoing strike poses significant challenges to our ability to succeed with our transformation. The board has concluded that legal tools are required to make progress in our ongoing negotiations with key stakeholders, and ultimately to succeed in making SAS a competitive and financially strong business,” he said.

SAS said it expects to complete the court-supervised process in the U.S. in 9-12 months.

The airline had SEK7.8 billion of cash as of June 30 and it said it expects to meet near-term business obligations, but a prolonged strike could have a material negative impact on its liquidity and financial position, it said.

To ensure sufficient funds to complete its restructuring, SAS is in advanced talks with a number of potential lenders for up to $700 million of bridge financing to support operations throughout the chapter 11 process, it added.

Aside from flight disruptions due to the strike, SAS said it will continue to fly throughout the chapter 11, while reservations, customer service and loyalty programs will continue as normal. Employee wages and benefits will be paid without interruption and vendors and suppliers will be paid in full under normal terms.

Write to Dominic Chopping at [email protected]

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