SAS AB Chief Executive Officer Anko van der Werff said he’s confident the Scandinavian airline will emerge successfully from a Chapter 11 restructuring after winning clearance for a $700 million financing package and seeing a rebound in its own performance.
Approval for the Apollo Global Management funding from a US bankruptcy judge is “the biggest and most important news” for SAS and will be “vital” as it seeks to move forward with a new strategic plan, Der Werff said Thursday in an interview in Gothenburg, Sweden.
Operations have stabilized since the end of a pilot strike in August, the CEO said, and while the dispute cost “considerable money” and “disappointed a lot of people,” the first two weeks of September have produced a “far better” operational performance at the airline, with passengers rushing back.
“Operationally we are stable,” he said, adding that the company’s forecasts still stand, with no sign so far that a cost-of-living squeeze will curb demand. “We are not going to put additional capacity in. But right now we are really content with how the winter is developing.”
Stockholm-based SAS expects the Chapter 11 process to continue until May or June, during which time the tri-national carrier will have sufficient liquidity, aided by the flow of cash from its own operations, according to the CEO.
He said negotiations are progressing on winning support for converting 20 billion kronor ($1.9 billion) of debt into equity, with more than half of the amount pledged, including Swedish, Danish and Norwegian state holdings.
Der Werff said the Apollo funding remains a loan and declined say if he’s keen to have the private-equity firm as a shareholder, while praising its expertise in turnarounds and aviation investments. He said Europe’s airline industry needs to consolidate further, though SAS isn’t in a position to participate right now.
“We have to clean up our own house first and make sure we are that vital healthy company again,” he said.
