European airline SAS falls 95% after restructuring deal

Shares of Scandinavian airline SAS fell 95% as markets opened on Wednesday, after the company Announced the restructuring deal Late Tuesday, which will see it delisted from the stock exchanges.

Losses have since narrowed, with shares down nearly 83% at 7:26 a.m. ET.

The share decline comes after the airline said on Tuesday that US investment firm Castlelake and fellow airline Air France-KLM will become the new major shareholders in SAS and own about 32% and 20% of the company respectively. The Danish government is expected to own approximately 26% of SAS, while Danish investment firm Lind Invest will own an 8.6% stake, according to SAS.

“All of SAS AB’s listed ordinary shares and hybrid commercial bonds are expected to be cancelled, redeemed and written off,” SAS said in a statement on Tuesday, adding that this process is expected to take place in the second quarter of 2024.

This development comes after years of financial difficulties faced by SAS. The airline filed for bankruptcy protection in the United States in July 2022 amid mounting pressure from pilot strikes and falling demand in the wake of the Covid-19 pandemic.

SAS also said it would eventually leave the Star Alliance airline group, of which it is a founding member, and become part of the Sky Team Alliance linked to Air France-KLM.

The move could impact the airline industry and especially the dynamic between Sky Team and Star Alliance, Jacob Pedersen, head of equity research at Sydbank, told CNBC’s “Squawk Box Europe” on Wednesday.

“It is shifting its strength towards Sky Team, not least in the Nordic region, where some Star Alliance carriers may have to reconsider their presence or at least change their strategy because they will now lose SAS as an alliance partner in this area,” he said.