Scandinavian Airline SAS Share Plummets 95% Following Restructuring Deal
SAS shares drop 95% after company announces restructuring plan
Scandinavian airline SAS experienced a significant decline in its stock value, with shares plummeting by 95% as markets opened on Wednesday. The sharp drop came following the company’s announcement of a restructuring deal late Tuesday, which will result in the delisting of SAS from exchanges.
Although losses have slightly reduced, shares were still down by approximately 83% as of 7:26 a.m. ET.
New major shareholders and updated ownership structure
SAS revealed on Tuesday that U.S. investment firm Castlelake and aviation company Air France-KLM will become the airline’s new major shareholders, holding approximately 32% and 20% of the company, respectively. The Danish government is also expected to own around 26% of SAS, while Danish investment firm Lind Invest will have an 8.6% stake, according to SAS.
In light of these changes, SAS stated that all of its common shares and listed commercial hybrid bonds will be cancelled, redeemed, and delisted. This process is projected to take place in the second quarter of 2024.
Challenges and future alliance transition
SAS has faced financial difficulties for several years. In July 2022, the airline filed for bankruptcy protection in the U.S. due to pilot strikes and low demand resulting from the Covid-19 pandemic.
Additionally, SAS announced its intention to leave the airline group Star Alliance, of which it is a founding member, to join the Sky Team Alliance associated with Air France-KLM.
This move could potentially impact the airline industry, particularly the dynamic between Sky Team and Star Alliance, according to Jacob Pedersen, head of equity research at Sydbank. Pedersen explained on AsumeTech’s “Squawk Box Europe” that the shift strengthens Sky Team, possibly causing Star Alliance airlines to reevaluate their presence and strategy in the Nordic region.