The government of Sweden has announced it will not give any fresh capital to struggling Scandinavian Airlines (SAS). It’s the latest step towards the Swedish government’s exit from ownership of SAS, which the Norwegian government completed several years ago.
At the end of April 2022, both governments of Denmark and Sweden held 21.8% ownership of SAS. “We will most likely not be a long-term owner of SAS,” confirmed Sweden’s minister of trade and industry Karl-Petter Thorwaldsson during a press conference.
The news will come as a blow to airline executives who must raise substantial new capital as part of a rescue plan following yet another quarter of heavy losses.
Sweden will support the restructuring plan
However, despite the Swedish government’s refusal to inject fresh capital into the airline, it will support the conversion of debt into shares, a cornerstone of the airline’s survival plan. Such a move will see the Swedish government’s 21.8% ownership share of SAS significantly diluted.
“SAS would like to express its gratitude to the Swedish state for the support we have received through the pandemic and the previous years,” stated an airline press release.
A realistic way forward?
Named ‘SAS Forward’, the restructuring plan includes a planned conversion of 20 billion Swedish kroner of debt into shares. But it also includes plans to raise 9.5 billion Swedish kroner in fresh investment, something which will now be more challenging following the Swedish government’s decision.
The decision was largely expected given that the Swedish government has on several occasions provided direct financial support to SAS, totalling more than 8 billion Swedish kroner.
This included support during the pandemic grounding. “Had we not been responsible owners then, the company would not have survived,” said Thorwaldsson, a fact that was confirmed by the airline.
Last week, Swedish media reported that a group of foreign investors are pursuing due diligence ahead of a potential investment in SAS. However, that investment would be on condition that the other elements of the restructuring plan are achieved.
In addition to the new capital and conversion of debt to shares, SAS Forward features substantial cost cutting measures including the renegotiation of collective agreements. Earlier this year, the airline announced the cancellation of around 4,000 flights for this summer season.