Swedish government rejects Saab plan

Swedish government rejects Saab plan
The Swedish government has rejected US carmaker General Motors' reconstruction plan for its Saab subsidiary as "unsustainable".

An upbeat Saab CEO Jan Åke Jonsson presented a reconstruction plan designed to save the beleaguered Swedish car firm in Trollhättan on Friday afternoon, hours after a Swedish court had granted the firm protection from creditors.

“We hope that the 27 billion kronor ($3 billion) rescue package that the parliament has approved will be of use to the automotive industry and together with GM’s contribution we have the possibility of getting through this,” Jonsson said to news agency TT.

But Swedish Industry Minister Maud Olofsson argued that the reconstruction plan presented by GM is “unsustainable” and thereby ruled out the prospect of Saab taking advantage of the rescue package of loan guarantees.

“A sustainable business plan is required which offers the prospect of profit with a reasonable time frame,” Olofsson said on Friday afternoon.

Saab, which reported a loss of three billion kronor ($249 million) for 2008, received the green light for a reconstruction from Vänersborg district court on Friday.

According to the plan Saab would become independent, increase volumes and concentrate production to Trollhättan.

The reconstruction is aimed at saving the troubled firm from bankruptcy and creditors will be required to cut their demands. Staff cuts have not been ruled out.

Saab employs about 4,100 people in Sweden, 3,700 of whom work in Trollhättan. Reports indicate that a further 15,000 jobs at the firm’s suppliers could also be at risk.

A broad chorus of opinion in the Swedish media on Saturday considerered the reconstruction to be simply an ordered bankruptcy with little prospect of the new capital required to save the firm.

“The company can’t pay its debts. Saab is bankrupt, slut, finito, finished and kaput,” Svenska Dagbladet analyst Nils-Olof Ollevik wrote on Saturday.

The loss of Saab would be a significant blow to the pride of the Sweden but a distinct air of inevitability surrounds the firm’s future and recent polls indicate broad support for the government’s position.