Exclusive-Apollo aims for majority stake in SAS Chapter 11 rescue plan, say sources.

Apollo Plans to Take Majority Stake in SAS AB

By Jacob Gronholt-Pedersen, Greg Roumeliotis and Marie Mannes

U.S. asset manager Apollo Global Management Inc is planning to take a majority stake in SAS AB as part of the Scandinavian airline’s rescue plan. The news has sent the embattled carrier’s shares up as much as 14% in Wednesday morning trading.

SAS has lost almost 60% of its value since it filed for Chapter 11 bankruptcy protection last July, seeking to slash costs and debt after wage talks with pilots collapsed. A deal with Apollo would be a test of European Union rules, which prevent more than 50% of an airline being held outside the bloc of 27 members.

Working with Aviation Regulators

Apollo will mainly work with aviation regulators in Sweden and Denmark to secure approval, according to a source familiar with the matter. The European Commission would also be involved, but the national regulators would be responsible for giving the go-ahead for a change of ownership.

Given a large part of Apollo’s capital originates from Europe-based investors, the fund is hoping to get approval for a deal. No final decision has yet been made on a possible investment, according to two sources familiar with the matter. The first source said a deal could be done before the year-end. Apollo and SAS declined to comment.

Experience in the Airline Industry

This wouldn’t be Apollo’s first foray into the airline industry. In 2018, it invested in Sun Country Airlines in an effort to help turn it around, helping it go public in 2021. The company also became the largest shareholder in Mexican airline Aeromexico in 2020 following Chapter 11 bankruptcy proceedings. Those experiences show it can approach long-term investments flexibly, the two sources said.

Government Support

Any deal would likely need support from Sweden and Denmark, which each own about 22% of SAS. The remainder is controlled by private shareholders. Denmark’s finance ministry told Reuters it was looking for one or more shareholders to take a majority stake in SAS. Any bailout would require the airline to maintain Copenhagen as a key passenger hub, it said. Sweden has said it won’t inject more cash in SAS.

Conclusion

SAS is looking for large investors and seeking to raise equity as part of its Chapter 11 bankruptcy plan. With Apollo’s experience in the airline industry and its flexible approach to long-term investments, it could be the perfect partner for SAS. However, the deal would need approval from Swedish and Danish regulators, as well as government support. It remains to be seen whether Apollo’s plans will come to fruition.