While a bankruptcy announcement is often the beginning of the end, there are also situations in which airlines are able to restructure their debt and come out of the situation with a better plan toward profitability.When the struggling airline is the flagship carrier for a small country, lenders and the government are keen to help keep the airline running. After Air Vanuatu abruptly canceled all flights and filed for bankruptcy back in May, Ernst & Young liquidators began working out a turnaround plan with the government of the small South Pacific nation. Related: Cruise ship rescues tourists left stranded by airline filing bankruptcyIn 2022, Copenhagen-based Scandinavian Airlines (the working name is shortened to SAS) filed for Chapter 11 bankruptcy protection in New York after struggling to come out of the drop in sales during the Covid-19 pandemic. It had, in total, amassed more than $2 billion in debt.CEO: Restructured debt puts airline in ‘much stronger position’On Aug. 28, the airline announced that it had restructured its debt and could officially declare that it had officially emerged from bankruptcy proceedings.More on retail and bankruptcy:Walmart store closing, auctioning off laptops and flat-screen TVsHome Depot CEO sounds the alarm on a growing problemFamous restaurant files for Chapter 11 bankruptcyThe restructuring process involved dividing principal ownership between Castlelake, Air France-KLM (AFRAF) , Lind Invest, and the government of Denmark (and thereby delisting SAS from the stock exchange earlier this month), moving its code-sharing network from Star Alliance to SkyTeam and receiving more than $1.2 billion in funds ($475 million in new unlisted equity and $725 million in secured convertible debt) from the new investors."This is truly a new era for SAS with a much stronger position, lower debt and lower cost," SAS CEO Anko van der Werff said to Reuters. Kåre Schultz, who previously served as the CEO of pharmaceutical giant Novo Nordisk (NVO) , has been assigned as chairman of the board overseeing the investors.Related: Cruise tips, tricks and hacks from an expert cruiserSAS promises new, financially-sound future (will it deliver?)The airline released a further statement saying that it has come out of the proceedings as a “competitive and financially robust airline with a strengthened capital structure.”The plan, which was approved both by the U.S. and European Union governments, also allows Air France-KLM to potentially acquire a stake of more than its current 20% in the company after a period of two years. The next steps, van der Werff said further, involve continuing to expand the airline to better protect it from financial downfalls in the future.According to the provided numbers, 18 million passengers traveled with SAS in the period going up to the end of July 2024. This is a 6.5% increase from the same period last year. The total cost reduction, which also involved reworking the airline’s network of flights, amounted to approximately 7.5 billion Swedish Kronor.“Efforts that made it possible to save and restart one of the finest companies in Scandinavia,” van der Werff said further. “Now, we must look ahead and complete the transformation that we have started, continue our commitment to achieving net-zero emissions by 2050, and take advantage of the opportunities in a growing market.”As part of its plan for expanding its network, SAS had earlier this year announced new routes to smaller Scandinavian cities such as Tromsø and Luleå as well as international holiday destinations such as Spain’s Ibiza and Montenegro’s Tivat.
