Foreign Investors Eye Struggling Scandinavian Airline SAS

Problems continue to mount up for senior executives at Scandinavian Airlines (SAS). Thousands of cancelled flights, angry pilots unions, delays to new aircraft and now another quarter of heavy losses have left many in the industry questioning the airline’s future.

Recent reports in the Swedish media suggest foreign investors are now interested in taking over the airline, albeit with significant financial conditions attached.

Financials improving, but big losses continue

Experts have poured cold water on the ambitious transformation plan unveiled earlier this year by CEO Anko van der Werff and further detailed following the latest poor financials.

Last week, SAS reported a pre-tax loss of $164 million on operating revenues of $720 million for the second accounting quarter that runs February thru April. While it did represent an improvement from the previous quarter and the same quarter last year, a sustainable business model is still a considerable way off.

The financial turmoil has continued following the announcement of the quarterly results. On June 2, the Oslo Stock Exchange announced that shares in SAS AB would receive additional supervision in its “recovery box” mechanism, used when the issuer is subject to circumstances that “make pricing of the securities particularly uncertain.”

An “unrealistic” transformation plan

Nordea analyst Hans-Erik Jacobsen told NRK the airline’s rescue plan was unrealistic, adding that the plan to raise 9.5 billion Swedish kronor and convert 20 billion Swedish kronor of debt and hybrid bonds to shares “seems impossible to achieve.”

Could foreign investors provide a solution?

According to Swedish newspaper Dagens Industri, a group of foreign investors has hired advisers with a goal of taking over SAS. However, the investment would be on the condition of a far-reaching corporate restructure in line with SAS’ own plan.

Details are thin on the ground at present but any potential deal would surely be of interest to the governments of Denmark and Sweden, which still part-own the airline yet have been reluctant to offer continued state support.

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