In October 2020, the European Commission approved a recapitalisation measure of approximately €833 million, notified by Sweden and Denmark, in favour of SAS. This measure was adopted under the State aid COVID-19 Temporary framework.
Ryanair challenged the Commission decisions and secured their annulment by the General Court of the EU in May 2023 (joined cases T-34/21 Ryanair v Commission and T-87/21 Condor Flugdienst v Commission). In late 2022, SAS entered a collective insolvency proceeding. Following the annulment of the 2020 decision, the Commission approved again in November 2023 the recapitalisation measure.
However, this measure remained insufficient to restore the airline’s viability and SAS had to restructure its activities.
In this context, Sweden and Denmark submitted to the Commission SAS’ restructuring plan and their aid of €1.3 billion to support the implementation of this plan. The airline’s restructuring plan included fleet streamlining, network optimisation, cost cuts and revenue improvement, to ensure a return to long-term viability.
The Commission evaluated the notified restructuring plan under its 2014 Guidelines for rescuing and restructuring non-financial undertakings in difficulty, and assessed the aid compatibility on the basis of the following conditions:
- Contribution to the development of air transportation: The aid will contribute to secure air connectivity within Scandinavia and internationally as well as help to prevent potential market failures and/or hardship.
- Addressing financial issues: The restructuring plan is deemed credible and adequate to address SAS’s financial difficulties through debt reduction, fleet and network optimisation, and cost-cutting measures. Without such restructuring measures, SAS’s financial burden would most certainly place it at risk of insolvency.
- Proportional aid: SAS will contribute up to €4.1 billion to the costs of its restructuring, primarily through fresh equity and new convertible debt from private investors, along with debt write-downs and aircraft financing leases. Moreover, more than 200,000 existing shareholders and subordinated creditors will share the burden through complete write-offs of their shares or debt instruments (which, in turn, will reduce the amount of State aid).
- Implementing competition safeguards: In order to limit any market distortions, the aid comes with safeguards. SAS commits to decreasing its fleet size, divesting assets and releasing a substantial number of airport slots.
On this basis, the Commission considered that the compatibility conditions for such aid were fulfilled and, on 28 June 2024, it approved Denmark and Sweden’s restructuring aid.
Time will tell whether Ryanair will again challenge the Commission decision and whether the challenge is sufficiently motivated and well founded.
