Scandinavian airlines shares plunge to become almost worthless after restructuring news

Scandinavian airline SAS saw its shares plummet by 95% when markets opened on October 4 after the company announced a restructuring deal that will result in its delisting from exchanges.

As reported by CNBC, while the losses have since eased during the day, shares remained down by approximately 83% at a later point.

The significant share price drop occurred following the announcement by the flag carrier for Denmark, Sweden and Norway that US investment firm Castlelake and aviation company Air France-KLM will become the new major shareholders of the airline, holding around 32% and 20% of the company, respectively, thus leaving the Star Alliance group of airlines. The Danish government is expected to own approximately 26% of SAS, while Danish investment firm Lind Invest will have an 8.6% stake.

As part of the restructuring, SAS stated that all of its common shares and listed commercial hybrid bonds are expected to be canceled, redeemed, and delisted, anticipated to occur in the second quarter of 2024.

The move follows years of financial challenges for SAS, including a bankruptcy protection filing in the US in July 2022, triggered by pilot strikes and decreased demand amid the COVID-19 pandemic.