Scandinavian Airlines System (SAS) has revealed its intention to file an amended Chapter 11 plan of reorganization along with a related disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York. The documents, subject to further amendments and court approval, outline crucial milestones for the chapter 11 process and financial forecasts for the reorganized SAS. As highlighted in their press release on November 4, 2023, SAS aims to implement a comprehensive transaction, including a substantial investment totaling USD 1.2 billion in the reorganized SAS.
The updated Disclosure Statement coincides with SAS sharing financial projections for the reorganized SAS, particularly for the fiscal year 2024, known as the Initial Projections Period. During this phase, SAS anticipates revenues surpassing SEK 48 billion, with an adjusted EBT ranging from SEK 0.0 to -1.0 billion. Net debt is expected to be in the range of SEK 36-39 billion before emerging from the chapter 11 process, decreasing to SEK 22-24 billion post-emergence. Liquidity is projected to be at or above SEK 4 billion before emergence, approximately 8% of LTM revenues, and SEK 11 billion after emergence, constituting around 25% of LTM revenues.
SAS underscores that these financial projections are indicative and subject to uncertainties and factors, including market demand, foreign exchange rates, fuel prices, and the successful implementation of the Chapter 11 Plan. The projections are based on assumptions such as a foreign exchange rate of 10.49 SEK per USD and an average base jet fuel price of USD 830 per metric ton, presented on a consolidated basis for the SAS Group.
The airline reiterates its expectation of a modest recovery for general unsecured creditors, no recovery for subordinated creditors, and no value for SAS AB’s existing shareholders. All common shares and listed commercial hybrid bonds are slated to be cancelled, redeemed, and delisted upon emergence from the chapter 11 process, according to SAS.
Approval from the U.S. Bankruptcy Court is anticipated in February 2024 for the Disclosure Statement and in the first quarter of 2024 for the Chapter 11 Plan. The effectiveness of the plan hinges on various conditions precedent, including regulatory approvals and the completion of a Swedish company reorganization at the SAS AB level. SAS projects emergence from the chapter 11 process by the end of the first half of 2024, as outlined in their press release on October 3, 2023.
