According to a decision from the European Court of Justice, SAS may be forced to pay back the multibillion-dollar sum that the airline received during the pandemic.
According to aviation analyst Jan Ohlsson, that could mean immediate bankruptcy.
– They are chasing “quick cash”, he says.
During the pandemic, when air travel dropped drastically, the airline SAS received eleven billion kroner of support from the EU. Lufthansa also received similar support, which they later paid back.
The low-cost company Ryanair considered this to be unfair and referred to distorted competition – and was vindicated by the EU court on Wednesday.
At the same time, SAS is undergoing a corporate restructuring after the airline applied for competition protection in the US through a so-called Chapter 11 procedure.
– It was because SAS had 20 billion in debt, which you don’t have the money to pay, so add eleven billion to that, says aviation analyst Jan Ohlsson.
Threatened with bankruptcy
If it ends up with SAS being forced to pay back the amount, it means, according to Jan Ohlsson, that the airline is threatened with bankruptcy.
– Chapter 11 is just a tool to protect oneself against creditors. The goal is to make money, and to do that you usually “trim the suit”.
Despite the fact that SAS has increased occupancy, and passengers are flocking in, you don’t see that much is actually happening when it comes to earning large sums, says Jan Ohlsson.
Company restructuring takes place with the help of the company’s majority owner Apollo global management, which in turn has taken several of SAS’s assets as collateral.
– If SAS ends up on the ground and is forced to go bankrupt, Apollo management will redeem the mortgage. It would lead to closed lines, aircraft would disappear from the fleet and the Eurobonus system would be sold.
“Pyramid Game”
Therefore, Jan Ohlsson believes that a “normal” bankruptcy would be less painful for SAS because the company would then be able to undergo a fresh start.
– Now, instead, Apollo management demands a quick profit. Therefore, they are now chasing “quick cash”, you can almost compare it to a pyramid scheme, says Jan Ohlsson.