SAS emerges from Chapter 11 with fresh capital, new chair

After a two-year-long bankruptcy process, Scandinavia’s flagship airline SAS AB is now under the ownership of Air France-KLM and private equity firm Castlelake LP, with former Novo Nordisk A/S executive Kare Schultz at the helm of its new board. 

The move comes amid much overdue airline consolidation in Europe in the wake of the Covid-19 pandemic, and a recent slowing in travel demand. It will also shore up Air France-KLM’s position in the Nordics, a reliable source of active travelers.

The restructuring saw Air France-KLM and Castlelake LP — with help from Lind Invest ApS and the Danish state — anchor a $1.2 billion investment comprised of $475 million in new unlisted equity and $725 million in secured convertible debt. As part of the process, the 78-year-old airline renegotiated its fleet and restructured over $2 billion of debt, it said in a filing on Wednesday. 

Air France-KLM has also agreed to take a controlling stake in SAS after a minimum of two years, so long as certain regulatory conditions and financial performance requirements are met, the carrier said in a separate statement. 

SAS filed for Chapter 11 bankruptcy protection in July 2022, after the pandemic disrupted travel, fuel prices rose and its pilots went on strike. In the aftermath, airlines saw demand surge. Since then, regulators have signed off on Deutsche Lufthansa AG’s purchase of Italy’s ITA, although British Airways-owned IAG SA was forced to drop its plan to buy Spanish rival Air Europa. 

“It has been a complex process,” SAS chief Executive Officer Anko van der Werff said in the statement about the restructuring. Efforts by staff, creditors and partners “made it possible to save and restart one of the finest companies in Scandinavia.”

Schultz, SAS’s new board chairman, is one of Denmark’s most successful pharmaceutical executives. The 63-year-old made a name for himself as an executive at Novo Nordisk A/S and was considered the front-runner to take over the chief executive officer position at the drugmaker, but left in 2015 when he was overlooked. 

Instead, he became CEO at H. Lundbeck A/S and later at the world’s biggest maker of copycat drugs, Teva Pharmaceutical Industries Ltd.