Tag Archives: Scandinavian Airlines-SAS

SAS voluntarily files for Chapter 11 reorganization in the U.S.

Scandinavian Airlines-SAS has made this announcement:

SAS AB has announced it is taking the next step in the comprehensive business transformation plan SAS FORWARD. To proceed with the implementation of key elements of the plan, SAS and certain of its subsidiaries have voluntarily filed for chapter 11 in the U.S., a legal process for financial restructuring conducted under U.S. federal court supervision. SAS’ operations and flight schedule are unaffected by the chapter 11 filing, and SAS will continue to serve its customers as normal, although the strike by SAS Scandinavia pilots’ unions will impact the flight schedule. The Company expects to meet its go forward business obligations in the near term. SAS’ cash-balance was SEK 7.8 billion as of June 30, 2022. The strike has a negative impact on the liquidity and financial position of the Company and, if prolonged, such impact could become material. The Company is in well advanced discussions with a number of potential lenders with respect to obtaining additional debtor-in-possession financing for up to USD 700 million (the equivalent of approximately SEK 7.0 billion), to support its operations throughout this court-supervised process. Debtor-in possession financing is a specialized type of bridge financing for businesses that are restructuring through a chapter 11 process.

SAS and certain of its subsidiaries today filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York, in the United States. The purpose of the filing is to accelerate SAS’ transformation by implementing key elements of its SAS FORWARD plan. These steps are consistent with SAS’ announcement on May 31, 2022, that SAS FORWARD involves complex multiparty negotiations and that the Company might seek to utilize one or more court restructuring proceedings designed to assist in the resolution of SAS’ financial difficulties and help accelerate the implementation of SAS FORWARD.

Chapter 11 is a well-established and flexible legal framework for restructuring businesses with operations in multiple jurisdictions, and has been used by a number of large international airlines to restructure. Through this process, SAS aims to reach agreements with key stakeholders, restructure the Company’s debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection. SAS expects to complete its court-supervised process in the U.S. in 9-12 months.

“We have been working closely with the SAS management team to progress SAS FORWARD. As part of that process, SAS has also been preparing for the option to utilize court restructuring proceedings in order to address the Company’s financial situation. The on-going 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. The process we have commenced will enable SAS to continue our more than 75-year legacy of being integral to Scandinavian infrastructure and societies. We are confident that the actions we are taking will strengthen SAS’ ability to capture the significant opportunities ahead as the industry continues to recover from the pandemic” said Carsten Dilling, Chairman of the Board of SAS.

Anko van der Werff, President and Chief Executive Officer of SAS, said, “Over the last several months, we’ve been working hard to improve our cost structure and improve our financial position. We are making progress, but a lot of work remains and the on-going strike has made an already challenging situation even tougher. The chapter 11 process gives us legal tools to accelerate our transformation, while being able to continue to operate the business as usual. We will continue to build back the network connectivity, products and service our customers expect, and we will continue to do so throughout this process and beyond. I am convinced that this process will enable us to become an even better airline for our customers and a stronger business partner in the years to come. Becoming a more competitive airline will require the full team’s effort and burden-sharing from all stakeholders. We urge SAS Scandinavia pilots’ unions to end their strike and engage constructively as part of this process.”

Strengthening SAS’ Ability to Deliver on SAS FORWARD

SAS FORWARD was launched to secure long-term competitiveness for SAS in the global aviation industry through a full transformation of its business. The plan aims to strengthen SAS’ financial position, and to achieve a sustainable cost structure with an annual cost reduction of approximately SEK 7.5 billion. The plan also encompasses raising at least SEK 9.5 billion in new equity capital as well as reducing or converting more than SEK 20 billion of debt into common equity (of which a majority is on-balance sheet debt), including state hybrid notes, commercial hybrid notes, Swiss bonds, term loans from states, aircraft lease liabilities and maintenance contract obligations and other executory contract obligations.

SAS has made progress in these efforts, having identified the vast majority of the SEK 7.5 billion in reduced annual costs, continued to invest in its digital capacities and sustainability efforts, and received support from the Swedish, Danish and Norwegian governments. The Company has also met with potential investors and engaged actively with multiple stakeholders to improve its overall financial strength. The chapter 11 process is intended to accelerate the transformation process.

Reduction or conversion of state-owned debt is subject to approval by the EU Commission and EFTA Surveillance Authority, respectively, under applicable state aid rules. As previously announced, a major part of the new equity capital is expected to be sought from new investors. The intended reductions or conversions of debt to equity and issuance of new shares are expected to result in substantial dilution to existing shareholders. Any issuance of new shares will be subject to approval by the general meeting as well as regulatory approvals.

Business Operations Unaffected – Continuing to Serve Customers

SAS’ operations and flight schedule are unaffected by the chapter 11 filing, and its Board of Directors and management continue to be in charge of the Company’s affairs. SAS’ reservations, customer service, SAS EuroBonus and all other customer services and systems will continue as normal. Separate from the chapter 11 process, the strike undertaken by the SAS Scandinavia pilots’ unions will impact the flight schedule.

SAS will continue to issue ticket refunds and honor travel coupons and payments or credits associated with baggage or service claims in adherence with its current policies.

Meeting Business Obligations

SAS’ assessment is that it has sufficient liquidity, including SEK 7.8 billion in cash as of June 30, 2022, to meet its business obligations in the near term. The strike has a negative impact on the liquidity and financial position of the Company and, if prolonged, such impact could become material. To ensure the Company has sufficient funds to complete its restructuring, the Company is in well advanced discussions with a number of potential lenders with respect to obtaining additional debtor-in-possession (“DIP”) financing for up to USD 700 million (the equivalent of approximately SEK 7.0 billion) to support its operations. DIP financing is a specialized type of bridge financing for businesses that are restructuring through a chapter 11 process, subject to certain conditions precedent for accessing all of such commitments.

As is typical in chapter 11 proceedings, the Company has filed a number of routine motions seeking court authorization to continue to support its business operations during the court-supervised process, including the continued payment of employee wages and benefits without interruption. As part of these motions, the Company has requested authority from the Court to continue honoring its customer programs in the ordinary course. SAS has also requested authority to honor various prepetition obligations owed to certain of its critical travel agency partners, vendors and suppliers from before the filing date. The Company will pay vendors and suppliers in full under normal terms for goods and services provided on or after the filing date.

The Company expects these motions to be heard at a “First Day” hearing, which is expected to be held in the coming days. SAS expects to receive Court approval for all of its requests.

Information about the Chapter 11 Process and Additional Resources

The chapter 11 restructuring process in the U.S. is different than a bankruptcy or administration proceeding in other parts of the world. The process provides the Company time and flexibility to reorganize its capital structure, reduce costs, and complete a financial restructuring under the supervision of the U.S. court system. The board of directors and management continue to run the Company and the restructuring process is overseen by a U.S. federal court. Many companies, including a number of large international airlines based outside of the U.S., have used the chapter 11 process to reorganize their financial obligations and emerge as stronger organizations.

Additional information about this process is available at the Company’s dedicated restructuring website, https://sasgroup.net/transformation. Court filings and other documents related to the chapter 11 process in the U.S. are available on a separate website administered by SAS’ claims agent, Kroll Restructuring Administration LLC, at https://cases.ra.kroll.com/SAS. Information is also available by calling (844) 242-7491 (U.S./Canada) or +1 (347) 338-6450 (International), as well as by email at SASInfo@ra.kroll.com.

SAS aircraft photo gallery:

SAS Scandinavia pilots’ union decides to go on strike, 50% of SAS flights could be impacted

Scandinavian Airlines-SAS has made this announcement of a pending strike:

Members of the SAS Scandinavia pilots’ unions have been called out on strike. The strike yields cancelations across the flight schedule and thousands of travelers are affected.

Since the notice of conflict was delivered on June 9, mediation between the pilots’ unions and SAS has been held. The strike follows as a consequence of the parties having been unable to reach an agreement. SAS wishes to continue mediation to be able to reach an agreement and end the strike as soon as possible.

“We deeply regret that our customers are affected by this strike, leading to delays and canceled flights. We know all our passengers have been longing for this summer holiday and have booked travels for themselves and their loved ones. SAS employees are working hard to help our customers that have been affected by this unfortunate situation.

A strike at this point is devastating for SAS and puts the company’s future together with the jobs of thousands of colleagues at stake. The decision to go on strike now demonstrates reckless behavior from the pilots’ unions and a shockingly low understanding of the critical situation that SAS is in,” says Anko van der Werff, President & CEO.

The strike is estimated to lead to the cancelation of approximately 50% of all scheduled SAS flights and impact around 30,000 passengers per day. The flights operated by SAS Link, SAS Connect and SAS’ external partners are not affected by the strike.

The strike has a negative impact on the liquidity and financial position of the company and, if prolonged, such impact could become material.

Anko van der Werff concludes “We are ready to resume mediation as soon as possible and we will do our utmost to reach an agreement that is viable to secure the long-term competitiveness and financial sustainability of the company. We presume that the SAS Scandinavia pilots’ unions realize what is at stake and choose to continue the work to find an agreement.”

Due to peak season, the possibility to rebook affected customers to equivalent flights will be highly limited. Customers whose flights are canceled, that we are unable to find viable alternatives for, are offered the options of either accepting a refund, or rebooking their ticket to a later date or to arrange alternative means of travel themselves and seek reimbursement from SAS.

SAS will send updates via SMS and email to those customers affected. There is a dedicated page for all information concerning traffic disruptions: www.flysas.com/en/disruptions, which will be updated continuously. Everyone who has a flight booked is advised to check the status of their flight on the website before going to the airport as flight status information is frequently updated.

SAS aircraft photo gallery:

SAS Scandinavia pilots’ union delays its strike

Scandinavian Airlines-SAS has mader this announcement:

After weeks of mediation, the mediators have, together with SAS and the SAS Scandinavia pilots’ unions, decided to further postpone the strike announced by the pilots’ unions until  July 4, 2022 12.01 PM CET.

Copyright Photo: SAS Airbus A320 SE-ROB pushes back from the gate at Oslo Airport (Jay Selman).

SAS welcomes the mediators’ decision as it continues to be the company’s firm ambition to reach an agreement and avoid a strike.

SAS aircraft photo gallery:

Mediation between SAS and the SAS Scandinavia pilots’ unions is prolonged 72 hours

Scandinavian Airlines-SAS issued this statement:

After weeks of mediation, the mediators have, together with SAS and the SAS Scandinavia pilots’ unions, decided to extend the deadline of the mediation until July 2, 2022 00.01 CET.

SAS welcomes the mediators’ decision as it continues to be the company’s firm ambition to reach an agreement and avoid a strike.

SAS aircraft photo gallery:

SAS comments on today’s announcement from the Norwegian Government

Scandinavian Airlines-SAS made this announcement:

Today’s announcement from the Norwegian Government,  regarding its intention to support our transformation plan SAS FORWARD by converting its debt holding into SAS equity, is appreciated and an important step towards the success of SAS FORWARD.

The Norwegian Government has also announced they will not contribute with new capital. SAS wants to express its appreciation of the support provided by the Norwegian State over the years and most recently during the pandemic.

The full implementation of SAS FORWARD, including the burden sharing components, will allow SAS to become a competitive player in the European airline industry.

Since 1946, SAS has been an important part of the Scandinavian infrastructure, connecting Norway and Scandinavia to the world and the world to Scandinavia. This continues to be SAS’ mission for generations to come.

SAS aircraft photo gallery:

SAS takes precautionary measures to support customers in case of pilot strike

SAS has received a notice of conflict from the pilots’ unions in Sweden, Norway and Denmark. Mediation is ongoing but if no agreement is reached before June 29, 2022, the pilots’ unions will go on strike. SAS is taking precautionary measures to support customers whose flights will be impacted by a potential strike.

A potential pilot strike will have substantial impact on SAS’ scheduled flights and many customers risk being impacted. Due to peak season, the availability of equivalent flights will be highly limited. Therefore, SAS is taking precautionary measures to enable customers to plan alternatives to their scheduled flight.

Option of rebooking flights to a later date

SAS offers passengers booked on SAS flights between June 27 – July 3, 2022  the option of rebooking the ticket, free of charge. Passengers can rebook to a SAS flight on another date, within the next 360 days, to the same destination if the same service class as the original ticket is available.

What travelers can do:

  • Not all SAS flights will be impacted by a potential strike. To see if a flight is likely to be affected, passengers can go to [länk] to check the status of their flight.
  • To use the option of rebooking an impacted flight, passengers are referred to My Bookings.

Passengers who booked their ticket via a Travel Agent or a Tour Operator should contact them directly.

High pressure on customer service

The potential strike is causing a high pressure on SAS’ customer service and the waiting time is longer than usual. By checking the status on a reservation through SAS’ self-service solutions, passengers can avoid a long wait on the phone and chat lines.

Customers will continuously receive information and updates via SMS, email and on our website. To be able to support customers impacted by a potential strike, SAS is strengthening customer service and call-centres for rebooking where possible.

SAS truly apologizes for the inconvenience this causes impacted customers.

SAS reports a 350% increase in traffic in May

SAS issued this traffic report for May:

During May more than 1.8 million passengers traveled with SAS, an increase of approximately 350% compared to the same month last year. SAS’ capacity increased at the same time by 200% compared with the same period last year. In comparison with last month, the total number of passengers increased with 18% and capacity was increased by 13%. The flown load factor for May was 71%, an improvement of 35 percentage points compared to May last year.

“Our ramp-up continues and I am happy to share we have now also started flying to and from Toronto. Overall ticket sales are positive as we are approaching the summer peak period. However, the whole aviation ecosystem is currently faced with challenges and to minimize the operational risk for summer SAS has made pro-active adjustments to its traffic program. Meanwhile, the crucial work on the necessary transformation of SAS continues”, says Anko van der Werff, President & CEO of SAS.

SAS scheduled traffic May22 Change1 Nov21- May22 Change1
ASK (Mill.) 3,071 184.8% 16,791 164.5%
RPK (Mill.) 2,163 455.6% 10,478 442.3%
Passenger load factor 70.4%         34.3 pp 62.4% 32.0 pp
No. of passengers (000) 1,770 338.0% 8,612 281.2%
Geographical development, schedule May22           vs.          May21 Nov21- May22   vs.   Nov20-May21
RPK ASK RPK ASK
Intercontinental 1,263.0% 155.8% 1,256.6% 153.2%
Europe/Intrascandinavia 526.6% 330.3% 601.0% 345.3%
Domestic 146.9% 73.1% 132.4% 43.7%
SAS charter traffic May22 Change1 Nov21- May22 Change1
ASK (Mill.) 160 48,480.4% 818 2,258.9%
RPK (Mill.) 143 173,758.5% 669 4,891.4%
Load factor 89.4% 64.4 pp 81,7% 43.1 pp
No. of passengers (000) 56 47,949.1% 227 5,994.5%
SAS total traffic (scheduled and charter) May22 Change1 Nov21- May22 Change1
ASK (Mill.) 3,231 199.5% 17,609 175.9%
RPK (Mill.) 2,305 492.2% 11,147 473.0%
Load factor 71.4% 35.3 pp 63.3% 32.8 pp
No. of passengers (000) 1,826 351.7% 8,839 290.6%

1 Change compared to same period last year, p p = percentage points

Preliminary yield and PASK May22 Nominal change1 FX adjusted change
Yield, SEK 1.10 -7.9% -10.4%
PASK, SEK 0.78 79.7% 74.9%
May22
Punctuality (arrival 15 min) 77.5%
Regularity 98.1%
Change in total CO2 emissions 131.9%
Change in CO2 emissions per available seat kilometer, -2.6%
Carbon offsetting of passenger related emissions 44.7%

SAS aircraft photo gallery:

Swedish government to assume SAS debt for equity, will not inject additional capital

SAS is getting a one-time lifeline from the Swedish government. However it will be the last injection.

SAS issued this statement:

Today’s announcement regarding the intention of the Swedish Government to support the conversion of its debt holdings into SAS equity is an important step toward the success of the transformation plan, SAS FORWARD.

The full implementation of SAS FORWARD, including the burden sharing components, will allow SAS to become a competitive player in the European airline industry, thereby attracting the necessary new equity capital to restore its liquidity, deleverage its balance sheet and invest in a new fleet of aircraft.

The Swedish Government has also announced they will not inject additional new capital. SAS wants to express its appreciation of the support that has been given from the Swedish State over the years. During the pandemic, the state support provided was an absolute necessity for the company’s survival.

Since 1946, SAS has been an important part of the Scandinavian infrastructure, connecting Sweden and Scandinavia to the world and the world to Scandinavia. This continues to be SAS’ mission for generations to come.

SAS aircraft photo gallery:

SAS sees a 380% increase in traffic in April compared with last year

Scandinavian Airlines-SAS issued this traffic report for April:

During April more than 1.5 million passengers traveled with SAS, an increase of approximately 380% compared to the same month last year. SAS’ capacity increased at the same time by 190% compared with the same period last year. In comparison with last month, the total number of passengers increased with 7% and capacity was increased by 15%. The flown load factor for April was 71%, an improvement of 41 percentage points compared to April last year.

“We continue the ramp-up and see the highest number of passengers since March 2020. Looking forward, sales and booking trends are positive for the summer period ahead. Traffic to and from Asia remains a challenge due to remaining COVID-19 restrictions as well as the geopolitical situation, that impact the recovery of far-Eastern traffic. We remain focused on building a competitive and financially strong SAS, which will be achieved through the success of the SAS FORWARD transformation plan”, says Anko van der Werff, President & CEO of SAS.

SAS scheduled traffic Apr22 Change1 Nov21- Apr22 Change1
ASK (Mill.) 2,794 184.1% 13,720 160.4%
RPK (Mill.) 1,980 561.4% 8,316 439.0%
Passenger load factor 70.9%         40.4 pp 60.6%  31.3 pp
No. of passengers (000) 1,526 378.2% 6,842 268.8%
Geographical development, schedule Apr22           vs.          Apr21 Nov21- Apr22   vs.   Nov20-Apr21
RPK ASK RPK ASK
Intercontinental 1,732.3% 159.9% 1,254.7% 152.6%
Europe/Intrascandinavia 386.4% 363.9% 623.1% 349.0%
Domestic 166.3% 52.6% 129.3% 38.8%
SAS charter traffic Apr22 Change1 Nov21- Apr22 Change1
ASK (Mill.) 74 2,576.9% 658 1,816.1%
RPK (Mill.) 65 5,743.1% 526 3,849.5%
Load factor 87.6% 47.5 pp 79.9% 41.1 pp
No. of passengers (000) 19 6,626.3% 171 4,644.9%
SAS total traffic (scheduled and charter) Apr22 Change1 Nov21- Apr22 Change1
ASK (Mill.) 2,868 190.8% 14,378 171.1%
RPK (Mill.) 2,045 580.5% 8,842 468.2%
Load factor 71.3% 40.8 pp 61.5% 32.1 pp
No. of passengers (000) 1,545 383.8% 7,013 277.3%

1 Change compared to same period last year, p p = percentage points

Preliminary yield and PASK Apr22 Nominal change1 FX adjusted change
Yield, SEK 1.03 -16.5% -18.9%
PASK, SEK 0.73 94.3% 88.9%
Apr22
Punctuality (arrival 15 min) 75.4%
Regularity 97.9%
Change in total CO2 emissions 125.9%
Change in CO2 emissions per available seat kilometer, -4.4%
Carbon offsetting of passenger related emissions 50.8%

Definitions:

RPK – Revenue passenger kilometers

ASK – Available seat kilometers
Load factor – RPK/ASK
Yield – Passenger revenues/RPK (scheduled)

PASK – Passenger revenues/ASK (scheduled)

Change in CO2 emissions per available seat kilometers – SAS passenger related carbon emissions divided with total available seat kilometers (incl non-revenue and EuroBonus tickets), rolling 12 months vs rolling 12 months previous year

Carbon offsetting of passenger related emissions – Share of SAS passenger related carbon emissions compensated by SAS (EuroBonus members, youth tickets and SAS’ staff travel) during the month

From fiscal year 2020 we report change in CO2 emissions in total and per Available Seat Kilometers (ASK) to align with our overall goal to reduce our total CO2emissions by 25% by 2025, compared to 2005.

SAS aircraft photo gallery:

SAS reports negotiations with its unions remains stalled on its Transformation (Reorganization) Plan

SAS provided this update on its transformation plan:

When Q1 results were released on February 22, SAS announced a new comprehensive business transformation plan; SAS FORWARD, which is designed to secure long-term competitiveness and improved financial strength. As outlined at that time, the success of the SAS FORWARD Plan is entirely dependent upon an ability to deleverage SAS and raise significant amounts of new equity capital. Both are directly dependent upon SAS management and its key stakeholders working together to deliver by FY2026 a full SEK 7.5 billion in annual cost reductions (inclusive of interest expense and dividends on hybrid bonds issued by SAS).

SAS management and its advisors have outlined to certain key stakeholder groups the importance of achieving the full burden sharing in an out-of-court process as a means of reaching a competitive cost structure and earning the support from financial parties for both the full debt-to-equity conversions and raising the new equity capital. Unfortunately, to date, such negotiations have yielded little results and much remains to be done before SAS management and board can declare success with this program.

A more comprehensive update on the progress of the SAS FORWARD Plan, will be published once discussions have progressed further. SAS will release its Q2 results on May 31, 2022, in accordance with its financial calendar.

SAS aircraft photo gallery: