Bankruptcies fall 25 percent in April

Corporate bankruptcies have continued to decline in Sweden, falling 25 percent in April compared to the same period last year.

The figures, from business and credit information company UC, show a total of 493 companies in Sweden declared bankruptcy last month. In the first four months of 2010, the total number of bankruptcies was 2083, a decline of 19 percent from the same period in 2009.

The improvement in the economy has increased the purchasing power of consumers and most sectors remain optimistic about the future, the report said.

“The increased demand that many companies are currently experiencing has led to a considerable improvement in their financial situation, with enhanced liquidity for many firms,” said UC marketing director Roland Sigbladh in a press release.

Almost every county and sector reported a positive trend of steadily decreasing bankruptcies, especially in metropolitan areas. Bankruptcy rates fell in the construction sector, UC reported, which reported an increase in new orders for the first time in two years. The exception was the the hotel and restaurant sectors, where bankruptcies in recent months have increased.

“In general, companies in these industries have small margins, which become an additional concern in a weak economy,” said Sigbladh. “In addition, the industries are highly competitive and more sensitive than many others. Many companies are still restrictive about business trips and conferences, something that has consequences for restaurants and hotels.”

Most counties reported declining bankruptcy rates and all of the three large metropolitan counties noted large declines. Västra Götaland county showed the largest decrease in April, where bankruptcies fell by 37 percent. Since the beginning of the year, the number of bankruptcies has fallen most in Skåne county.

Although most signs now point in a positive direction with decreasing bankruptcies and increased demand and production, there are several uncertainties regarding the future.

“Despite a strong Swedish economy, we have international concerns, particularly the crisis in Greece,” said Sigbladh. “However, other European countries also have significant problems. Moreover, exporters, among them many heavy industries and their suppliers, may be affected if the kronor continues to strengthen against the euro.”

He added, “The parliamentary election in the autumn will add to the uncertainty because companies want to know what economic conditions will prevail. In addition, potential interest rate increases may result in consumers tightening their finances.”

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Norwegian’s subsidiaries in Denmark and Sweden go bankrupt

The struggling low-cost airline Norwegian has reported its staffing subsidiaries in Denmark and Sweden have filed for bankruptcy, meaning roughly three quarters of its pilots and crew will lose their jobs.

Norwegian's subsidiaries in Denmark and Sweden go bankrupt
A Norwegian Air Shuttle plane: Photo: Norwegian

In a press release issued on Monday afternoon, the airline said that the financial support packages offered by the Swedish and Danish government had not been sufficiently generous to keep the subsidiaries which employ pilots and cabin crew in the two countries solvent. 

”The impact the Coronavirus has had on the airline industry is unprecedented. We have done everything we can to avoid making this last-resort decision and we have asked for access to government support in both Sweden and Denmark”, said Norwegian's chief executive Jacob Schram in the statement.  

“Our pilots and cabin crew are the core of our business and they have done a fantastic job for many years.”

“It is heart-breaking that our Swedish and Danish pilot and cabin crew subsidiaries now are forced to file for bankruptcy, and I’m truly sorry for the consequences this will have for our colleagues,”  Norwegian's chief executive Jacob Schram said in the statement.  

“We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible.”

The company said it was also immediately ending staffing deals with the OSM Aviation, which supplies it with crew based in Spain, UK, Finland, Sweden and the US.

The company said that 1,571 pilots and 3,134 cabin crew would be affected by the move, with only the 700 pilots and 1,300 cabin crew based in Norway, France and Italy being kept on.

In the release, the company blamed the “the lack of significant financial support” from the Swedish and Danish governments, which it contrasted with that of Norway, which has agreed to pay “all salary related costs” while staff are furloughed. 

The companies declared bankrupt include: 
Norwegian Pilot Services Sweden AB
Norwegian Pilot Services Denmark ApS
Norwegian Cabin Services Denmark ApS
Norwegian Air Resources Denmark LH ApS