Scandinavian airline SAS has been dealt a massive blow after the Swedish government refused to inject any more equity into the loss-making carrier. SAS is seeking to raise 9.5 billion Crowns (US $834 million) as part of a vital transformation plan but struggled to get any of its shareholders to commit to the plan.
The announcement sent shares in the Stockholm-based carrier to nosedive to record lows but SAS said it was pleased the Swedish government had, at least, supported its plans to convert debt holdings into additional equity.
The transformation plan, known as SAS FORWARD, was first unveiled in February ut the airline announced last week that its success was built on shareholders pumping the debt-laden carrier with additional capital.
The airline admits that negotiations to date with key shareholders “have yielded little results” and that failure to win additional capital may see a wholesale restructuring of the airline managed by the courts.
In a statement, SAS said it wanted to “express its appreciation of the support that has been given from the Swedish State over the years.”
“During the pandemic, the state support provided was an absolute necessity for the company’s survival.”
Sweden owns just over 20 per cent of SAS but in the long term wants to offload its share. Neighbouring Denmark also owns a 21 per cent stake in SAS and wants to remain a shareholder for the foreseeable future. Denmark has not yet decided whether to commit more money to SAS.
Along with raising new equity, SAS FORWARD also involves the airline converting 20 billion Crowns of debt into equity and cutting costs by 7.5 billion Crowns within five years.
SAS says the pandemic added a “substantial” amount of debt to its already highly leveraged balance sheet and that fierce competition from low-cost carriers is adding to its woes.
“In addition, recent macroeconomic changes and geopolitical events are limiting operations and creating additional costs,” the airline said last week.
