Swedish government rejects bailout for SAS airline
Sweden's business minister Karl-Petter Thorwaldsson announced on Tuesday that the Swedish state will not bailout ailing airline SAS - and that the Swedish state will be reducing their stake in the company.
"The state are not planning on putting more money into SAS in the future. I don't think we can be more clear than that," business minister Karl-Petter Thorwaldsson told a press conference.
In February, SAS leadership presented a rescue plan for the ailing airline, which suffered sizeable losses during the pandemic. The plan proposed converting debts to equity, securing new capital, finding new investors and reducing costs.
On June 7th, Thorwaldsson told a press conference that the state would not be contributing funds to the airline's rescue plan.
"We've supported SAS with over 8 billion kronor in the last few years. But you have to draw the line at some point and we believe there are other state expenses which are more important than continuing to invest in an airline," Thorwaldsson told newswire TT.
SAS stocks dropped a further 10 percent on the Stockholm exchange following the news, with one stock now costing 69 öre.
However, the state will contribute towards converting the airline's debts into equity.
"The company has stated that it needs to reduce liabilities corresponding to 20 billion kronor and now we have covered our share of 4 billion. Now it is up to SAS to get other lenders to work with this plan as well," Thorwaldsson said.
SAS leadership responded in a press statement, welcoming the government's decision to assist the company in converting liabilities to equity. SAS leadership also thanked the Swedish state for the help they have been given in the past, even though they will not receive more funds in the future.
Thorwaldsson underlined the fact that the airline has received 8.2 billion kronor from the government since 2000, with the latest cash injection during the pandemic.
Sweden and Denmark are SAS's main shareholders, with each holding 21.8 percent stakes, which rose in the past two years following rescue plans linked to the Covid pandemic.
Thorwaldsson did not wish to speculate on the extent to which the state would be reducing their stake in the airline, referring to future negotiations, but said that there were high chances that the state would have a "much lower stake in the future".
He further repeated the government's previous standpoint that they would not be a long-term owner in SAS, saying that this statement was a step towards that goal.
A previous argument for the state bailing out SAS has been that flight transport is important for Sweden's infrastructure. However, according to Thorwaldsson, the need for a state-owned airline has now decreased.
"When SAS was founded 60 years ago, there was often only one airline in each country," he said.
"Today, there are many airlines flying both domestically and internationally. So it's obvious that in that respect, it's no longer as essential to have a state-owned airline."
Hit hard by the pandemic, SAS already cut 40 percent of its workforce -- 5,000 staff -- in 2020.
The airline posted a net loss of 1.5 billion kronor in the second quarter, compared to a net loss of 2.4 billion kronor a year earlier.
Despite this, Thorwaldsson was positive about the future of the company, saying that if they can achieve their rescue plan, they have good chances of becoming a competitive airline.
"If they can achieve the Forward plan, that's a way of producing a competitive SAS," he said.
"So I still believe there's a reason to be positive about SAS's future."
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"The state are not planning on putting more money into SAS in the future. I don't think we can be more clear than that," business minister Karl-Petter Thorwaldsson told a press conference.
In February, SAS leadership presented a rescue plan for the ailing airline, which suffered sizeable losses during the pandemic. The plan proposed converting debts to equity, securing new capital, finding new investors and reducing costs.
On June 7th, Thorwaldsson told a press conference that the state would not be contributing funds to the airline's rescue plan.
"We've supported SAS with over 8 billion kronor in the last few years. But you have to draw the line at some point and we believe there are other state expenses which are more important than continuing to invest in an airline," Thorwaldsson told newswire TT.
SAS stocks dropped a further 10 percent on the Stockholm exchange following the news, with one stock now costing 69 öre.
However, the state will contribute towards converting the airline's debts into equity.
"The company has stated that it needs to reduce liabilities corresponding to 20 billion kronor and now we have covered our share of 4 billion. Now it is up to SAS to get other lenders to work with this plan as well," Thorwaldsson said.
SAS leadership responded in a press statement, welcoming the government's decision to assist the company in converting liabilities to equity. SAS leadership also thanked the Swedish state for the help they have been given in the past, even though they will not receive more funds in the future.
Thorwaldsson underlined the fact that the airline has received 8.2 billion kronor from the government since 2000, with the latest cash injection during the pandemic.
Sweden and Denmark are SAS's main shareholders, with each holding 21.8 percent stakes, which rose in the past two years following rescue plans linked to the Covid pandemic.
Thorwaldsson did not wish to speculate on the extent to which the state would be reducing their stake in the airline, referring to future negotiations, but said that there were high chances that the state would have a "much lower stake in the future".
He further repeated the government's previous standpoint that they would not be a long-term owner in SAS, saying that this statement was a step towards that goal.
A previous argument for the state bailing out SAS has been that flight transport is important for Sweden's infrastructure. However, according to Thorwaldsson, the need for a state-owned airline has now decreased.
"When SAS was founded 60 years ago, there was often only one airline in each country," he said.
"Today, there are many airlines flying both domestically and internationally. So it's obvious that in that respect, it's no longer as essential to have a state-owned airline."
Hit hard by the pandemic, SAS already cut 40 percent of its workforce -- 5,000 staff -- in 2020.
The airline posted a net loss of 1.5 billion kronor in the second quarter, compared to a net loss of 2.4 billion kronor a year earlier.
Despite this, Thorwaldsson was positive about the future of the company, saying that if they can achieve their rescue plan, they have good chances of becoming a competitive airline.
"If they can achieve the Forward plan, that's a way of producing a competitive SAS," he said.
"So I still believe there's a reason to be positive about SAS's future."
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