SAS bridge financing keeps survival hopes airborne, shares climb

Scandinavian airline SAS kept its bid for survival aloft at the weekend by securing bridge financing through bankruptcy protection proceedings, sending its shares 5% higher on Monday. The airline, whose biggest owners are Sweden and Denmark, said on Sunday it had signed a deal with US private equity firm Apollo Global Management for $700m in financing to fund its reorganisation under US Chapter 11 bankruptcy protection proceedings. SAS filed for the protection in July, a day after most of its pilots launched a crippling two-week strike over collective agreements. SAS said the action could scare off lenders and could threaten its existence. Shares in SAS were up 5.3% at 1358 GMT, taking a one-month rise to 22%. The stock is still down 63% in the past year. "The price of being on the brink of bankruptcy is high, but now the process is getting going, and the hard work of getting billions in debt dropped and also significantly reducing costs can be accelerated," Sydbank analyst Jacob Pedersen said. "The reality remains that existing shareholders' assets are gone and that they are exposed to a big dilution when the capital increase is carried out," Pedersen said in a note to clients, reiterating a "sell" recommendation for SAS shares. Pedersen said the deal with Apollo suggested Apollo could become a major shareholder in SAS by converting the loan to equity at the end of the Chapter 11 process.<br/>