Scandinavian Airlines-SAS has made this announcement:
SAS today announces exciting details about the next chapter in its future commercial relationships. SAS will remain in Star Alliance through August 31, 2024, and customers can start enjoying benefits with most SkyTeam airlines beginning September 1, 2024.
Following this transition starting September 1, 2024, SAS EuroBonus members will enjoy loyalty benefits similar to those offered today with Star Alliance airlines with most of SkyTeam’s airlines.
SAS is in advanced negotiations with SkyTeam and many of its member carriers to develop and grow extensive commercial relationships. We look forward to giving our customers access to 19 new airlines and more than 1,060 destinations around the globe. Customers will enjoy continued access to their favorite cities and regions, while enjoying more travel options to previously unserved destinations.
We have worked closely with both Star Alliance and SkyTeam and many of their members over the last 6 months to ensure a smooth transition for all customers and our EuroBonus members. All customer benefits of Star Alliance, including earn and burn of EuroBonus points, lounge access and other benefits along the customer journey will remain through August 31, 2024. EuroBonus will remain SAS’ loyalty program, also after SAS leaves Star Alliance.
SAS AB has announced that it has today applied for company reorganization (Sw. företagsrekonstruktion) in Sweden. The opening of the proceeding is subject to approval by the Stockholm District Court.
The application is made only in relation to the listed parent company of the SAS Group, SAS AB, and not any subsidiaries or the airline as such.
SAS’ operations and flight schedule will remain unaffected by the reorganization proceeding and SAS will continue to serve its customers in the ordinary course throughout this process.
On March 19, 2024, the U.S. Bankruptcy Court for the Southern District of New York confirmed SAS’ chapter 11 plan of reorganization (the “Chapter 11 Plan”).
Application for company reorganization in Sweden was specifically contemplated by the Chapter 11 Plan and a successful completion of the Swedish reorganization proceeding is a condition for the Chapter 11 Plan to become effective.
The effectiveness of the Chapter 11 Plan also remains subject to approvals from various regulatory authorities and certain other customary conditions precedent. SAS currently expects to emerge from its restructuring proceedings around the end of the first half of 2024.
Service Announcement: The need to inspect a component on some of our aircraft requires pausing operations with these aircraft, causing traffic disruptions in parts of our network. Passengers affected by the traffic disruptions will be notified directly via email and/or SMS.
SAS has announced that the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) has approved SAS’ Plan of Reorganization (“Chapter 11 Plan”).
The effectiveness of the Chapter 11 Plan remains subject to various conditions precedent, including approvals from various regulatory authorities and the completion of a Swedish company reorganization at the SAS AB level.
SAS currently expects to emerge from the chapter 11 process around the end of the first half of 2024, and reiterates its expectation that there will be no recovery for subordinated creditors and no value for SAS AB’s existing shareholders. All of SAS AB’s common shares and listed commercial hybrid bonds are expected to be cancelled, redeemed and delisted in connection with emergence from the restructuring proceedings. SAS’ operations and flight schedule remain unaffected by the restructuring proceedings and SAS will continue to serve its customers in the ordinary course throughout this process.
SAS initiated voluntary chapter 11 proceedings in the U.S. in order to accelerate the implementation of its comprehensive business transformation plan, SAS FORWARD. The aim of the chapter 11 process was to reach agreements with key stakeholders, restructure the company’s debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection.
Over the course of the chapter 11 process, SAS has successfully reconfigured its aircraft fleet and reached amended lease agreements with 15 lessors, representing 59 aircraft. Through the amended lease agreements, SAS expects to achieve the targeted annual cost savings of at least SEK 1.0 billion in reduced aircraft lease expenses and annual cash flow items relating to aircraft financing.
SAS has also successfully concluded a competitive exit financing solicitation process, selecting Castlelake, L.P., on behalf of certain funds or affiliates (“Castlelake”), Air France-KLM S.A. (“Air France-KLM”) and Lind Invest ApS (“Lind Invest”), together with the Danish state, as the winning bidder consortium. The agreed transaction structure includes a total investment in reorganized SAS corresponding to USD 1,200 million, which includes USD 475 million in new unlisted equity and USD 725 million in secured convertible debt.
The Chapter 11 Plan, which was approved by the Court, is supported by more than 99 percent of the creditors that voted on the Chapter 11 Plan.
The Norwegian Armed Forces have on March 4, 2024 signed a new agreement with SAS for strategic air evacuation. The agreement ensures continued capacity for strategic air evacuation using SAS’ latest Airbus A320neo aircraft. This will follow the phase-out of the current aircraft and transition to the new agreement will take place in 2025.
Photo: SAS
The agreement between Norwegian Armed Forces and SAS consists of two parts: a cooperation agreement to design a A320neo based solution and an agreement covering operational assignments.
Photo: SAS
The A320neo is a regular passenger plane and – once the new design is finalized – can be converted into a flying hospital, with medical equipment and hospital beds. SAS’ Airbus A320neo has around 18% lower CO2 emissions compared to the aircraft it replaces. Additionally, there is 30% less noise in these aircraft, creating a more favorable environment for evacuees and crew on board.
SAS has a 25-year history of taking part in evacuation assignments, with missions such as the tsunami in Thailand, and evacuation missions from Afghanistan, Moira refugee camp and Ukrainian patients.
Strengthening the Strategic Evacuation Capacity for the Future
“With this agreement, the capacity for evacuation and repatriation of sick or wounded civilians and military personnel, including intensive care patients, is strengthened for national and international operations, from and to airports in all parts of the world,” says the Commander of the Norwegian Defense Logistics Organization, Brigadier General Anders Jernberg.
Capacity will be established for use of two medical evacuation aircraft, in addition to the Armed Forces’ own resources.
“The collaboration is unique. Private business and the Armed Forces come together to form a total defense capacity. Ensuring the ability to carry out strategic air evacuation is important for the Norwegian Armed Forces, as well as from an international perspective and society at large,” says Commander of Norwegian Armed Forces Joint Medical Services, Brigadier General Petter Iversen.
The Norwegian Armed Forces Joint Medical Services play a key role in the operation of medical evacuation, contributing with its professional expertise to develop solutions for the new aircraft. They also hold the main responsibility for planning, preparedness for and execution of medical air evacuation on behalf of the Norwegian Armed Forces, led by the Norwegian Joint Headquarter.
Norwegian Defense Logistics Organization is the contract partner, on behalf of the Norwegian Armed Forces.
The CEO of Scandinavian Airlines-SAS has outlined the company’s plans as it moves forward on exiting Chapter 11 with its new partners Air France and KLM Royal Dutch Airlines:
I am pleased to conclude a busy first quarter and winter season for SAS, marked by increased passenger volumes, and several exciting new projects and destinations. We are pleased to see that more and more people choose to travel with SAS, which clearly confirms that our ramp-up efforts continue to be successful.
We are getting ready for the summer season, during which SAS will fly to over 130 destinations in more than 40 countries. We have added frequencies to popular destinations across Europe, and nine new European destinations. We will also increase flights to North America and Asia in the summer program by adding flights to popular destinations such as New York and Tokyo. Furthermore, we have expanded the summer program to include Atlanta in the North American network, with daily direct flights throughout the summer season. We look forward to flying our passengers to their summer destinations.
SAS aims to be a driving force in sustainable aviation and in January, we announced a new collaboration with Airbus, Swedavia, Vattenfall and Avinor, to jointly investigate the feasibility of infrastructure for hydrogen-fueled aircraft at airports in Norway and Sweden, with the goal to develop a framework for the rollout of hydrogen-powered flights. This partnership is an important step in driving the transition towards achieving net-zero emissions.
We are making steady progress in our Chapter 11 process in the US and in reaching our overall targets in the SAS FORWARD plan.
In November, we entered into an investment agreement with the winning bidder consortium in our exit financing solicitation process, consisting of Castlelake, Air France-KLM and Lind Invest, together with the Danish state. The agreement entails a total investment in the reorganized SAS corresponding to approximately SEK 13.2 billion. We currently aim to receive approval by the US court for the Chapter 11 plan in the first quarter of 2024, followed by regulatory approval and a likely Swedish company reorganization at the SAS AB level. As a result of that process, we repeat the expectation that there will be only a modest recovery for general unsecured creditors, no recovery for subordinated creditors and no value for SAS AB’s existing shareholders, and that all of SAS AB’s common shares and listed commercial hybrid bonds will be cancelled, redeemed and delisted, in connection with emergence from the Chapter 11 process. Any payment of recoveries to creditors will be made only after the completion of the transaction and the fulfilment of any conditions for payment to creditors. We currently expect to emerge from the restructuring proceedings around the end of the first half of 2024.
NOVEMBER 2023 – JANUARY 2024
Revenue: MSEK 8,923 (7,896)
Income before tax (EBT): MSEK -1,070 (-2,449)
Income before tax and items affecting comparability: MSEK -1,032 (-2,451)
Net income for the period: -1,453 (-2,709)
Earnings per common share: SEK -0.20 (-0.37)
SIGNIFICANT EVENTS DURING THE QUARTER
On Nov. 4, SAS entered into an investment agreement with the winning bidder consortium and a DIP term loan agreement with Castlelake.
On Nov. 15, SAS repaid its original DIP term loan.
On Nov. 29, the European Commission announced that the recapitalization of SAS in 2020 complied with state aid rules and was thereby approved.
On Jan 2, SAS announced over 130 destinations in more than 40 countries for the summer season 2024.
On Jan. 23, SAS published updated financial projections for the reorganized SAS. SAS currently targets to receive court approval of the Chapter 11 plan in the first quarter of 2024 followed by regulatory approval and a likely Swedish company reorganization at the SAS AB level. SAS currently expects to complete the restructuring proceedings around the end of the first half of 2024.
SAS expects that there will be only modest recovery for general unsecured creditors, no recovery for subordinated unsecured creditors and that there will be no value for SAS AB’s existing shareholders upon emergence from the restructuring process. All of SAS AB’s common shares and listed commercial hybrid bonds are expected to be cancelled, redeemed and delisted.
SIGNIFICANT EVENTS AFTER THE QUARTER
On Feb. 5, SAS filed a second amended Chapter 11 plan and a related disclosure statement with the US court. The Chapter 11 plan obtains support of the Official Committee of Unsecured Creditors.
OUTLOOK
The first quarter interim report includes financial projections on page 10.
QUARTERLY RESULTS
We observed continued healthy passenger demand through the first quarter with the total number of passengers up 6.3 percent compared with the same period last year. Year-on-year, our RPK increased 13.3 percent, while capacity increased 9.3 percent. Our flown load factor for the quarter was 71.8 percent, up 2.6 percentage points compared with the same period last year.
The increase in passenger demand and capacity led to a year-on-year increase of 13 percent in our total operating revenue, which landed at SEK 8.9 billion for the quarter. Earnings before tax ended at a negative SEK 1.1 billion, representing a year-on-year improvement of SEK 1.4 billion.
Cost reductions across the business remain in focus to secure our cost competitiveness, and total operating expenses for the quarter ended at SEK 10.1 billion. Many of the cost efficiencies of the SAS FORWARD plan are ramping up over time, and some have been implemented but cannot be recognized in our financial results until after emergence from Chapter 11, including cost savings from the fleet restructuring.
The cash balance at the end of the quarter was SEK 5.3 billion. Cash flow from operating activities during the quarter amounted to an outflow of SEK 38 million.
NEW ROUTES AND DESTINATIONS
As part of SAS’ strategy to strengthen our offering for Scandinavian travelers, and to adapt to the relative increase in demand for leisure travel, SAS has announced several new routes during the quarter. We are getting ready for the summer season, and in early January we were pleased to announce that SAS will fly to over 130 destinations in more than 40 countries this summer. We have added frequencies to popular destinations across Europe, and we have added nine new European destinations, including direct flights to Ibiza, and Tivat on the coast of Montenegro, among others. We will also increase flights to North America and Asia in the summer program by adding frequencies to popular destinations such as New York and Tokyo.
We have also expanded the summer program to include Atlanta in the North American network, with daily direct flights throughout the summer season. With almost 94 million passengers passing through in 2022, Hartsfield-Jackson Atlanta International Airport is the world’s busiest and most efficient airport. Cargo transportation is expected to play an important role for this route, partly because of its proximity to the Port of Savannah, the largest and fastest-growing container terminal in America. This also means an expanded offering for SAS passengers, who can look forward to reaching several new and exciting destinations across the Southern USA, Caribbean and Latin America, all conveniently accessible from Atlanta.
Furthermore, SAS has added frequencies between Stockholm and Skellefteå, due to the increasing growth in the Skellefteå region. From April 8, SAS will offer new frequencies on the busiest business travel days. Expanded air traffic plays a crucial role in the region’s ongoing expansion, and we are proud to provide businesses and residents of Skellefteå with opportunities to connect with the world.
In February, after the end of the quarter, we launched the concept Destination Unknown, which entails SAS inviting EuroBonus members to embark on a mysterious journey. On April 5, SAS EuroBonus members will meet at Copenhagen Airport ready to board a mystery trip. The travelers are invited to explore the concept of flying to an unknown destination and join a unique adventure curated by SAS. We were pleased to be met by great interest for this concept, and more than 1,000 members signed up for the chance to embark on the mystery journey within minutes. The allure of the unknown destination will keep travelers on the edge of their seats throughout the flight until the destination is revealed. All Destination Unknown tickets are biofuel tickets.
SAS was also awarded a three-year contract extension with Equinor in February, for both domestic and international travel. The contract with Equinor represents a significant contribution to SAS’ passenger volume in Norway. SAS was chosen on the basis of an extensive network, attractive timetable, commercial terms and one of Europe’s most modern fleets. We are delighted that Equinor once again have chosen SAS as their preferred carrier for business travel, demonstrating a continued confidence in us for the next three years.
UPDATE ON SAS’ TRANSFORMATION PLAN
We launched our comprehensive business transformation plan SAS FORWARD in conjunction with the publication of the first quarter report for FY 2022, in the end of February 2022. The aim of the plan is to secure long-term competitiveness for SAS in the global aviation industry. On July 5, 2022, to accelerate the implementation of SAS FORWARD, we announced that we had voluntarily filed for Chapter 11 in the US, a wellestablished and flexible legal framework for restructuring businesses with operations in multiple jurisdictions. Through this process, we aim to reach agreements with key stakeholders, restructure the company’s debt obligations, reconfigure our aircraft fleet and emerge with a significant capital injection.
During the quarter, in November, we entered into an investment agreement with the winning bidder consortium in our exit financing solicitation process, consisting of Castlelake, Air France-KLM and Lind Invest, together with the Danish state. The agreement entails a total investment in the reorganized SAS corresponding to approximately SEK 13.2 billion, including approximately SEK 5.2 billion in new unlisted equity and approximately SEK 8 billion in secured convertible debt. As part of the transaction, we have also secured new Debtor-in-Possession (“DIP”) financing of SEK 5.5 billion from Castlelake. The funds from the new DIP financing agreement are being used for, among other things, refinancing SAS’ original DIP term loan, increasing liquidity, and supporting SAS’ path to exit from its voluntary restructuring proceedings. The refinancing of SAS’ original term loan was completed in November.
As part of the transaction, SAS also intends to eventually exit the Star Alliance and join the SkyTeam Alliance, of which Air France-KLM is a founding member. Through the completion of this process and the opportunities presented by being part of SkyTeam, we will be able to further enhance SAS’ offerings for the benefit of our colleagues, customers and communities. This is a truly exciting step for SAS. However, it is important to note that nothing is changing as of now. SAS is still part of Star Alliance and our EuroBonus members will continue to enjoy their usual benefits when flying on our partner airlines. Members can continue to accrue and redeem points – just like today, and their benefits when they fly with SAS will not be impacted. The agreed exit transaction remains subject to approval in connection with the confirmation of our Chapter 11 plan of reorganization.
On February 5, 2024, SAS filed a second amended Chapter 11 plan and related disclosure statement with the US court. SAS also announced expected recoveries for creditors in the Chapter 11 process and that the Official Committee of Unsecured Creditors supports the Chapter 11 plan. The Chapter 11 plan and the disclosure statement remain subject to further amendments and court approval.
We currently aim to receive approval from the US court for the Chapter 11 plan in the first quarter of 2024, followed by regulatory approval and a likely Swedish company reorganization at the SAS AB level. As a result of that process, we repeat the expectation that there will be only a modest recovery for general unsecured creditors, no recovery for subordinated creditors and no value for SAS AB’s existing shareholders, and that all of SAS AB’s common shares and listed commercial hybrid bonds will be cancelled, redeemed and delisted, in connection with emergence from the Chapter 11 process. Any payment of recoveries to creditors will be made only after the completion of the transaction and the fulfilment of any conditions for payment to creditors. We currently expect to emerge from the restructuring proceedings around the end of the first half of 2024.
STEPS TOWARDS FOSSIL-FREE AVIATION
SAS aims to decarbonize aviation and progress on this ambitious plan can only be achieved through collaboration. By involving our customers and teaming up with them, we can reduce CO2 emissions and enable increased large-scale production of sustainable aviation fuels.
Several organizations joined SAS Corporate Sustainability Program (CSP) during the quarter. We were pleased to announce that Skellefteå City Airport becomes the first individual airport to join the CSP, and that SKEBO Skelleftebostäder AB becomes the first real estate company to join the CSP. The partnerships entail that the organizations will purchase environmentally friendly aviation fuel for all its business trips with SAS throughout FY 2024. We hope these partnerships will inspire other companies to join our CSP and be part of the journey to transform aviation for generations to come.
SAS has announced a new collaboration with Airbus, Swedavia, Vattenfall and Avinor, to jointly investigate the feasibility of infrastructure for hydrogen-fueled aircraft at airports in Norway and Sweden. Hydrogen is expected to become a significant fuel source for aviation in the future, and the goal of the collaboration is to develop a framework for the rollout of hydrogen-powered flights. By partnering with some of the strongest and most innovative players in the industry, we are assuming our responsibility to drive the transition towards achieving net-zero emissions. This is a journey that matters not just for SAS, but for the entire aviation industry.
On January 23, we also launched the EuroBonus Conscious Traveler program. The new program enables EuroBonus members to make conscious choices when traveling with SAS – while getting rewarded for it. At the heart of Conscious Traveler lies a single goal; the involvement of our customers in the journey toward net zero emissions. The launch of EuroBonus Conscious Traveler is a contribution toward the industry target of net zero CO2 emissions by 2050 – perhaps our most important journey yet. We look forward to following the impact of the program throughout the year.
LOOKING FORWARD
I am pleased to conclude a busy winter season for SAS, marked by increased passenger volumes, and several exciting new projects and destinations.
We continue our work toward completing our Chapter 11 process in the US, and toward reaching the objectives in the SAS FORWARD plan. The aim is currently to receive approval from the US court of the Chapter 11 plan in the first quarter of 2024, to be followed by obtaining regulatory approvals and the implementation of a Swedish company reorganization at the SAS AB level. While work still remains, I am pleased to see the substantial progress we are making to become a competitive and financially strong company.
I am grateful for the hard work my colleagues at SAS are doing to ensure that we take the best possible care of our customers, and to ensure that they get the quality service they expect from us. Thank you for all your efforts!
As always, we look forward to welcoming our customers on board our aircraft.
Anko van der Werff President & CEO Stockholm, March 7, 2024
We are proud to announce that the contract to fly medical evacuation (MEDEVAC) flights with war victims from Ukraine, on assignment from the Forsvaret – Norwegian Armed Forces and Helsedirektoratet, has been extended until November 2024.
SAS has converted a commercial Boeing 737 aircraft into a flying hospital with stretchers and medical equipment, allowing for transport of wounded and critically ill to hospitals across Europe.
Since 2022, Norway has evacuated 2,183 patients and relatives from Poland (on the Ukrainian boarder) to other European countries, including Norway. On 1 February, the Norwegian Armed Forces carried out their 100th medical evacuation in support of the EU and Ukraine.
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