Scandinavian airline SAS, which declared bankruptcy in the United States in 2020, has been bailed out by a group of investors.
The airline said Tuesday that U.S. investment firm Castlelake as well as Air France-KLM would become shareholders in the new company.
Along with the Danish government, they will own more than 75 percent of the airline.
SAS, the largest carrier in Scandinavia, said it will have an infusion of more than $1 billion for the reorganized company. Air France-KLM said it would invest $144.5 million and retains the right to increase its stake after two years, and perhaps even take control of the company, subject to financial conditions.
"Air France has undergone an astonishing turnaround from the end of the pandemic to today. SAS needs similarly extensive restructuring," one investment analyst wrote in a research note to clients.
The analyst also wrote that SAS might have to give up one of its hubs in either Stockholm or Copenhagen because they are so geographically close to each other and the airline continues to lose money. Closing one of the two hubs would be a huge money-saver.
Because of the money woes, current shareholders might not receive any dividends.
"I put a big question mark if an American court can decide that the owners of a Swedish listed company must give away their shares without any compensation. For me it's very hard to understand," private Swedish investor Gerald Engstrom told Reuters.
The reorganization still needs approval from a U.S. bankruptcy court since the airline filed the initial bankruptcy in American courts.
"By securing this capital, we are fulfilling one of the key pillars in our SAS (transformation) plan, which will provide the company with a strong financial foundation to help drive the airline forward," SAS Chairman Carsten Dilling told a news conference.
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