Scandinavian Airlines (SAS) has confirmed that it has entered into an agreement with Apollo Global Management to raise US$700 million which it hopes will enable the stricken carrier to complete its restructuring process under Chapter 11 bankruptcy protection in the U.S.
The news comes hot on the heels of an announcement that Norwegian, Danish and Swedish pilots have agreed to accept a collective bargaining agreement which has guaranteed there will be no further strike action taken. The recent 15-day strike by pilots had cost the Scandinavian carrier roughly US$145 million and had affected over 380,000 passengers during what is usually a peak travel period. The airline grounded some 3,700 flights during the strike, saying last week its number of passengers fell 32% in July from June and capacity by 23%.
The strike also accelerated the carrier’s need to file for Chapter 11 bankruptcy according to SAS Chief Executive Anko van der Werff. Moving forward, as SAS was unprofitable even before the global pandemic owing to keen competition from low-cost carriers, it would now need to substantially slash running costs as well as raise additional finance in order to survive. While the Swedish government has openly rejected SAS’ plea for financial help, the Danish government is adopting a more flexible approach and has indicated it might consider injecting fresh funds if SAS can find support from private-sector investors.
SAS anticipates receiving court approval for the US$700 loan by the end of September and hopes to complete the Chapter 11 restructuring process in nine to 12 months. (£1.00 = US$1.21 at time of publication).