SAS Files Chapter 11 In The United States

SAS AB (“SAS”) has announced that 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.

Carsten Dilling, Chairman of the Board of SAS, said: “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.”

Dilling continued: “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.”

And Dilling added: “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.”

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.” And he continued: “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,” van der Werff said.

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.

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.