SAS shareholders have decided to: Approve the rescue plan – E24

SAS airline has been hit hard by the corona pandemic. On Tuesday at 10:00, shareholders were due to vote on the rescue package proposed by management, after creditors finally gave the green light on September 2.

SAS was given the green light, because shareholders voted unanimously for the package, SAS CEO Rickard Gustafson told E24 by phone from Stockholm.

Therefore, the management has received all the necessary powers to implement the plan.

– This feels good. It’s been hard work for six months, and while we’ve achieved some important milestones early in this process, it was important to get this support from shareholders, says Gustafson.

The next concrete step now is for the SAS board to meet on Wednesday to make the necessary decisions to implement the recapitalization plan, says the SAS CEO.

In short, the bailout plan means that SAS will raise NOK 12 billion in new capital and hybrid bonds, one billion of existing debt will be written off and converted to shares, and further cuts will be made that will reduce the cost level by NOK 4 billion. .

Read more about the details in the rescue plan at the bottom of the box!

After SAS submitted a proposal for a financial rescue plan for the company in late June, there has been intense work and demanding negotiations to reach an agreement.

Several creditors disagreed with the terms of the first plan and SAS had to cancel scheduled creditors meetings this summer in which they were actually going to vote.

Finally, management put a revised proposal on the table and in August management made it clear that they would not go further than they had already done.

On September 2, it became clear that enough creditors had voted in favor of the bailout plan proposals and thus only shareholders remained.

SAS Stock Announcement – Extraordinary General Meeting

Will continue to reduce 5,000

Although creditors and shareholders, including major shareholders Sweden, Denmark and the Wallenberg Foundation, have said yes, the job is not done yet.

SAS must continue to agree with employees and their union delegates on new salary and working conditions in order to fulfill the promise to reduce the level of costs by 4 billion SEK.

The big cost cuts are in addition to all the big cuts that SAS and its employees have made in the years since the 2012 crisis.

The new cost cuts are part of the plan that shareholders and creditors have voted for.

– Is the next big task to agree with the pilots and the cabin crew?

– This is part of the plan that includes all employees, not only pilots and cabin crew, but also employees of technical, ground and administrative services. We have an active dialogue with all of them, says Gustafson.

SAS management announced in March that they themselves were receiving a 20 percent pay cut and that they were asking employees to do the same.

Regardless of the agreement that enters into force, SAS management believes that the company still has too many employees, compared to the expected market for the next few years.

In April, SAS announced that it would have to cut 5,000 jobs in the group, which corresponds to about 40 percent of the workforce.

– Unfortunately, I don’t see the opportunity to change that number. To date, we have completed more than 4,000 of the announced size reduction of 5,000, Gustafson says.

I think it will endure the crisis of the crown

The crown crisis and travel restrictions have ensured that passenger numbers and revenue have plummeted in the aviation industry. Airlines can’t cut costs as much as revenues have fallen and money is therefore coming out of the industry coffers.

On the part of SAS, the company estimates that they “burn” between 500 and 700 million SEK per month. Although the company ended the month of July with NOK 6.2 billion on the books, therefore they need the replenishment they receive in the now adopted package.

– As the situation looks now, will this recapitalization plan approved for SAS through the crown crisis be enough?

– As we have said, we have assumed that 2020 and 2021 will be years of financial stress. So we believe that from 2022 we will see a demand in the market that is approaching the levels we had before the crisis, although we do not expect to return completely to normal, says Gustafson and continues:

– This is the premise on which we have based our recapitalization plan, so my answer is that we believe that we must overcome the crisis.

The Norwegian state never agreed to the SAS rescue plan. Norway sold SAS a couple of years before the crown crisis hit, but refrained from helping SAS with fresh capital.

During the crown crisis, the Norwegian authorities lowered fares and offered airlines state-guaranteed loans with a total budget of NOK 6 billion, of which Norwegian received half.

SAS has not used the Norwegian scheme so far, in part because it believes it is too expensive and the conditions too demanding to meet.

– These days both you and other airlines are meeting with the Norwegian government. Do you want more support from Norway in the process?

– We are analyzing the possibilities of how the Norwegian state can support aviation in general with different schemes that are the same for all actors. We welcome that, says Gustafson and continues:

– Regarding the Norwegian credit line, we are pleased that the government has extended the applicable period. This allows us to consider whether we should use it or not.

– Now Norway did not join this package and contributed capital. Do you still want Norway to provide capital and not just loans in the future?

– You should never exclude anything, but here and now it has become clear from the Norwegian side that you do not want to become the owner of any airline and that there must be equal treatment. We can only accept that, says Gustafson.

Background: This is the SAS rescue plan

The plan, which was launched on June 30, is based primarily on:

• SEK 4 billion in cost improvements by 2022
• A private placement in which the largest shareholders buy new shares for SEK 2.006 billion for SEK 1.16 each (Sweden, Denmark and the Wallenberg family)
• An issue of SEK 3.99 billion offered to existing shareholders of NOK 1.16 per share (each shareholder receives nine subscription rights for new shares for each share they already own)
• Hybrid debt issuance totaling SEK 6.0 billion to the Swedish and Danish state, divided into two loans of 5.0 and 1.0 billion
• 81.3 per cent of the NOK 2.25 billion bond loan due in November 2022 is converted into shares.
• 70.8 percent of the existing 1.5 billion hybrid bond is converted to shares.

On August 7, the following was modified:

• Hybrid debt of a total of 6,000 million is offered at higher interest rates
• 81.3 per cent of the NOK 2.25 billion bond loan due in November 2022 will no longer be converted into shares. Instead, 100 percent of the loan will be converted into a new hybrid bond with a tiered interest rate.
• The conversion of the existing 1.5 billion hybrid bond will increase from 70.8 to 90 percent. Also, a better course is offered. Creditors now get more shares to pay off the debt, as the conversion price is reduced from 1.89 to 1.16 crowns.

On August 14, the following was modified:

• All interest surcharges to the Danish and Swedish governments for the new hybrid capital of six billion are increased by 0.9 percentage points.