Swedish airline SAS secures EU approval for $915 million recapitalisation (updated)

Sas AB

29/11/2023 18:13

(Adds SAS comment, analyst comments, paragraphs 7-10)
       BRUSSELS, Nov 29 (Reuters) - Swedish airline SAS
 SAS.ST  on Wednesday won approval from EU competition
authorities for its 833 million euro ($915 million)
recapitalisation by Denmark and Sweden.
    The European Commission reviewed the case again after
Europe's second top court in May scrapped its decision to clear
the state aid due to a lack of a so-called step-up mechanism,
which gives incentives to businesses to repay the aid. 
    In 2020, Denmark and Sweden took part in COVID-19 pandemic
state aid measures to help SAS, which endured travel
restrictions. 
    The investments were initially approved by the European
Commission as compatible state aid for pandemic-stricken
businesses.
    The approval, however, had been contested by budget airline
Ryanair which sued the European Commission for nodding through
billions of euros in state aid to its rivals. 
    The Commission said on Wednesday that SAS has submitted the
mechanism that now complies with the state aid rules and which
should be put in place within two months.
        SAS said in a separate statement that the measure, which
is a "step-up mechanism", includes commitments by SAS to issue
new hybrid bonds to the states free of charge, pending
shareholders approval.
    The company said it planned to convene an extraordinary
shareholders meeting in January to approve the mechanism.  
        Sydbank analyst Jacob Pedersen said the result was a
very positive outcome for SAS, and that while it did not
directly affect SAS' bankruptcy proceedings in the U.S. it had
indirectly done so.
    "That this state aid was deemed unlawful has definitely
impacted SAS for the past five-six months and made it a
challenge in regards to the investment plan," Pedersen said. 
        SAS is under Chapter 11 bankruptcy protection in the
United States.
    In November, it was allowed to enter into an investment
agreement with a consortium consisting of Air France-KLM
 AIRF.PA , Castlelake, Lind Invest and the Danish state, which
are set to become its new owners.     
    ($1 = 0.9107 euros)

 (Reporting by Foo Yun Chee and Marie Mannes in Stockholm;
writing by Nerijus Adomaitis; editing by Grant McCool)
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