Scandinavian Airlines (SAS) has announced that it has signed a deal with Apollo Global Management to raise US$700 million. The airline is hoping that this would allow it to finish its restructuring under Chapter 11 bankruptcy protection in the U.S.
The revelation comes shortly after it was revealed that pilots in Norway, Denmark, and Sweden had agreed to accept a collective bargaining deal that ensured there would be no additional strike action.
Over 380,000 customers were impacted by the previous 15-day pilot strike, which cost the Scandinavian airline about US$145 million during a typically busy travel season. The airline canceled 3,700 flights during the strike after announcing last week that its capacity and passenger volume both decreased by 23% in July compared to June.
According to SAS Chief Executive Anko van der Werff, the strike also made the carrier’s need to file for Chapter 11 bankruptcy more urgent.
Going forward, SAS would need to drastically reduce operating costs as well as obtain extra funding in order to continue, as it was already unprofitable even before the global pandemic due to fierce competition from low-cost carriers.
While the Swedish government has publicly rejected SAS’ request for financial assistance, the Danish government is taking a more accommodating stance and has said it would consider providing new funding if SAS can secure backing from investors in the private sector.
By the end of September, SAS aims to get the $700 loan approved by the court, and it expects to finish the Chapter 11 reorganization process in nine to twelve months. (At the time of publication, $1.00 equaled $1.21 USD).