European carrier SAS’s shares plummet by 95 pc in wake of major restructuring 

Scandinavian Airlines (SAS) witnessed a staggering 95 per cent drop in its shares as it unveiled a comprehensive financial restructuring plan aimed at averting bankruptcy.

The restructuring plan introduces new prominent investors while erasing the stakes held by over 250,000 shareholders. This drastic measure follows SAS's filing for bankruptcy protection in the United States in 2022, resulting from years of grappling with high operational costs, coupled with reduced customer demand amid the COVID-19 pandemic, The Economic Times reported.

SAS disclosed that U.S. investment firm Castlelake and Air France-KLM will emerge as major shareholders alongside the Danish state, leading to the delisting of the airline's stock from the Stockholm, Copenhagen, and Oslo exchanges. Air France-KLM, in particular, aims to integrate SAS flights into its own airlines operating from its Amsterdam and Paris hubs, thereby bolstering its Nordic presence.

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The restructuring will see Castlelake holding a stake of approximately 32 per cent, Air France-KLM owning around 20 per cent, Danish investor Lind Invest acquiring 8.6 per cent, and the Danish state retaining about 26 per cent. The remaining equity is anticipated to be distributed among creditors. As a result, SAS shares plummeted by 83 per cent, trading at 0.05 Swedish crowns ($0.0045).

This move necessitates the cancellation, redemption, and delisting of all SAS's common shares and listed commercial hybrid bonds, scheduled to occur in the second quarter of 2024.

Sydbank analyst Jacob Pedersen suggested that the residual value of SAS shares may be due to potential legal challenges or investor optimism. He emphasised that SAS management had previously acknowledged the risk of shares becoming worthless, which has now materialised. The Economic Times quoted Pedersen as saying, "If you can't find someone even more opportunistic and risk-averse than yourself to sell it to, you will ultimately end up with a loss.”

CNBC reported that SAS's decision to exit the Star Alliance, of which it is a founding member, and join the Sky Team Alliance, aligned with Air France-KLM, could have significant implications for the airline industry, particularly in terms of the power dynamics between the two alliances.

According to Pedersen, this shift in alliances strengthens Sky Team, particularly in the Nordic region, potentially prompting some Star Alliance airlines to reconsider their strategies or presence due to the loss of SAS as an alliance partner.

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