SAS AB ("SAS") announces 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.
Invitation to press conference with webcast
A press conference with webcast will be held at 08.45 AM CEST on July 5, 2022.
No advance notification is necessary.
Speakers: Carsten Dilling, Chairman of the Board of SAS and Anko van der Werff,
President and Chief Executive Officer of SAS
Language: English
Location for physical attendance: SAS Head office, Frösundaviks allé 1, 169 70
Solna, Sweden
Webcast link: https://live.sasgroup.net
(for broadcasters, please contact studio@sas.se to request access to the video
and audio feed)
Dial-in details for the press conference:
DK: +45 354 455 77
FI: +358 981 710 310
NO: +47 235 002 43
SE: +46 8 566 426 51
UK: +44 3333 0008 04
PIN: 11653156#
Advisors
Weil, Gotshal & Manges LLP is serving as global legal counsel and Mannheimer
Swartling Advokatbyrå AB is serving as Swedish legal counsel to SAS. Seabury
Securities LLC and Skandinaviska Enskilda Banken AB are serving as investment
bankers, Seabury is also serving as restructuring advisor. FTI Consulting is
serving as financial advisor.
For further information, please contact:
SAS Press office, +46 8 797 29 44
Louise Bergström, VP Investor Relations, +46 70 997 0493
This is information that SAS AB is obliged to make public pursuant to the EU
Market Abuse Regulation. The information was submitted for publication by Louise
Bergström at 07:45 a.m. CEST on July 5, 2022.
About SAS
SAS, Scandinavia's leading airline, with main hubs in Copenhagen, Oslo and
Stockholm, is flying to destinations in Europe, USA and Asia. Spurred by a
Scandinavian heritage and sustainable values, SAS aims to be the global leader
in sustainable aviation. We will reduce total carbon emissions by 25 percent by
2025, by using more sustainable aviation fuel and our modern fleet with fuel
-efficient aircraft. In addition to flight operations, SAS offers ground
handling services, technical maintenance and air cargo services. SAS is a
founder member of the Star AllianceT, and together with its partner airlines
offers a wide network worldwide. Learn more at https://www.sasgroup.net
IMPORTANT INFORMATION
The press release does not constitute an offer to sell or issue, or the
solicitation of an offer to buy or acquire, or subscribe for, shares or any
other financial instruments in SAS.
This press release contains forward-looking statements that reflect SAS' current
view of future events as well as financial and operational development. These
statements may include, without limitation, any statements preceded by, followed
by or including words such as "intend", "assess", "expect", "may", "plan",
"estimate" and other expressions involving indications or predictions regarding
future development or trends and other words and terms of similar meaning or the
negative thereof. These forward-looking statements have been prepared for
illustrative purposes only, are not based on historical facts, are not
guarantees of future performance, reflect SAS' beliefs and expectations, and are
subject to known and unknown risks, uncertainties and assumptions and other
factors that could cause actual events and performance to differ materially from
any expected future events or performance expressed or implied by such forward
-looking statements. As a result of these risks, uncertainties, assumptions and
other factors, you should not place undue reliance on these forward-looking
statements as a prediction of actual future events or otherwise. The information
contained in this press release is subject to change without notice and, except
as required by applicable law, SAS does not assume any responsibility or
obligation to update publicly or review any of the forward-looking statements
contained in it, whether as a result of new information, future events or
otherwise. Nothing in this press release constitutes or should be construed as
constituting a profit forecast.