Sweden will not inject any more money into SAS airline
The Swedish government will not inject new capital into Scandinavian Airlines (SAS), its industry minister said Tuesday, dealing a blow to the airline’s restructuring efforts and sending its shares down 14% to record lows.
Last week, SAS said the restructuring plan announced in February was dependent on raising SEK9.5 billion ($968 million) in cash and converting SEK20 billion of debt into equity, warning of liquidity problems if this was not achieved, Reuters reported.
But no shareholders, including the main owners, Sweden and Denmark, with a 21.8% stake each in the company, have committed to the plan.
→ Iberia authorized to acquire 20% stake in Air Europa.
“We want to make it clear that we will not inject new capital into SAS in the future,” Sweden’s Karl-Petter Thorwaldsson told a news conference.
The minister indicated that he would, however, propose to parliament that SAS be allowed to convert the debt it owes to the government into equity. In the long term, the government still wants to exit SAS, he added, reiterating a position from years ago.
The airline said in a statement that Sweden’s decision to support the debt conversion was an important step toward a successful transformation.
In recent decades, Sweden has injected 8.2 billion kronor ($834 million) into the airline, including through loans to rescue the company from collapse during the COVID-19 pandemic.
→ Britain tells airlines to stop selling flights they can’t deliver.
The airline was already in trouble before the pandemic because of growing competition from low-cost carriers such as Ryanair and Norwegian Air, and has sought agreements with unions to cut costs.
“The Swedish decision puts serious pressure on creditors and employees to reach agreements,” Sydbank analyst Jacob Pedersen said in a note to clients.
“If the company cannot attract capital, because Sweden and possibly Denmark will not invest more money, this risks being a step on the road to the grave,” said Pedersen, who maintains a sell rating on shares that have fallen 67% so far this year.
CEO Anko van der Werff said last week that to attract new investors, SAS must cut costs for leased aircraft that are not being used due to the closure of Russian airspace and the slow recovery in Asia.
SAS is not alone in struggling to recover in the wake of the pandemic. Another company seeking shareholder backing is Air France-KLM, which in May launched a €2.3 billion ($2.4 billion) share sale.
By Anna Ringstrom, Stine Jacobsen
Photo: Dylan T/Wikipedia
Related Topics
First Quarter: Boeing Posts Smaller-Than-Expected Loss on Higher Jet Deliveries
Boeing Sells Portions of Digital Aviation Solutions for $10.55 Billion: What Does This Move Mean?
Boeing 737 MAX Returns to U.S. from China Amid Escalating Tariff War
China Orders Airlines to Suspend Boeing Jet Deliveries Amid Trade War
Plataforma Informativa de Aviación Comercial líder en América Latina.