EU approves €1.3 billion restructuring aid for SAS

The European Commission has greenlighted a €1.3 billion restructuring aid package for Scandinavian Airlines System AB (SAS), proposed by Denmark and Sweden. This measure aims to restore SAS’s long-term viability and limit market competition distortions.

Background and Need for Aid

• Previous Support: In October 2020, the Commission approved €833 million in aid under the COVID-19 Temporary Framework. Despite this, SAS filed for collective insolvency in late 2022.
• Restructuring Plan: The new plan includes fleet streamlining, network optimization, cost reduction, and revenue enhancement, backed by new state aid from Denmark and Sweden.

Commission’s Assessment

The Commission evaluated the aid under its R&R Guidelines and determined the following:

1. Contribution to Connectivity: The aid will secure crucial air connectivity within Scandinavia and internationally, preventing potential market failures and hardship.
2. Addressing Financial Issues: The restructuring tackles SAS’s financial woes through debt reduction, fleet and network optimization, and cost-cutting measures.
3. Proportional Aid: SAS will contribute €4.1 billion, primarily from fresh equity and new convertible debt from private investors, along with debt write-downs and aircraft financing leases. Additionally, over 200,000 existing shareholders and subordinated creditors will share the burden through complete write-offs of their shares or debt instruments.
4. Competition Safeguards: To mitigate market distortion, SAS will reduce its fleet, divest assets, and release a significant number of airport slots, particularly at major EU hubs.

Conclusion

The Commission concluded that the aid from Denmark and Sweden complies with EU State aid rules, ensuring SAS’s return to viability without ongoing state support while limiting competition distortions.

Official Statement

Margrethe Vestager, Executive Vice-President for competition policy, stated: “The restructuring aid to SAS approved today will ensure air connectivity to and from Scandinavia to benefit European citizens. SAS’s restructuring plan will secure its long-term viability, and to limit public support distortions, SAS will reduce its presence in air transport activities through fleet reduction, limited ground handling, maintenance business, and slot releases.”

The decision will be available under case numbers SA.110687 and SA.110688 on the Commission’s competition website following resolution of confidentiality issues.