After the Swedish government announced that it will not be injecting any new capital into Scandinavian Airlines (SAS), neighboring Denmark is considering if it will commit more money to the ailing airline.
On June 7, Sweden’s business minister Karl-Petter Thorwaldsson told a press conference that the state would not be contributing funds to the ailing airline’s restructuring plan. Instead, Thorwaldsson said he would propose to the local parliament to give the green light for converting the carrier’s existing debts into equity capital.
“We want to be clear that we will not inject new capital into SAS in the future,” Thorwaldsson was cited as saying in a report by Reuters.
SAS responded to the decision in a statement, saying: “The Swedish Government has announced they will not inject additional new capital. SAS wants to express its appreciation of the support that has been given from the Swedish State over the years.”
“During the pandemic, the state support provided was an absolute necessity for the company’s survival. Since 1946, SAS has been an important part of the Scandinavian infrastructure, connecting Sweden and Scandinavia to the world and the world to Scandinavia. This continues to be SAS’ mission for generations to come,” the statement continued.
Denmark also owns a 21% stake in SAS but has not yet revealed its final decision regarding the airline’s restructuring process and if it will commit more money to the airline. The country’s Minister of Finance Nicolai Wammen said that the government expects to provide a more detailed decision in the coming weeks.
Following the restructuring plan, which was publicly announced on June 3, 2022, SAS aimed to raise around $968 million (SEK9.5 billion) in cash and to convert around $1.9 billion (SEK20 billion) of debt into equity. However, none of the owners have agreed with the plan.
Unconfirmed interest from foreign investors
SAS has already attracted the attention of a group of undisclosed foreign investors who have shown interest in the possibility of acquiring the airline, local media has reported.
On June 1, 2022, people familiar with the matter told Dagens Industri that undisclosed investors have already appointed advisors for initial negotiations with SAS. Negotiations between parties are expected to include an evaluation of whether the loss-making airline can meet requirements to proceed with its rescue plan as well as the long-term restructuring process.
The news follows a recent warning from SAS CEO Anko Van der Werff that the carrier could face court administration unless it manages to reach a deal regarding cost savings.
Speaking at a quarterly earnings meeting on May 31, 2022, the CEO said SAS was yet to reach an agreement with its aircraft lessors over its proposed fleet simplifying plan as a cost-cutting measure. SAS aims to cut its wide-body aircraft fleet, including Airbus A330 and A350 jets, as the airline finds it challenging to operate long-haul flights due to the remaining air travel restrictions across Asia as well as the closure of airspace over Russia.
“If people are still aiming for or expecting that there will be a magical solution to the challenges that we’re faced with, I think they are wrong,” Van der Werff was cited as saying by Airline Weekly.
“If SAS is unable to find the right outcome for us to be competitive then we may be forced to go to court,” he added.
SAS has already cut around 4,000 flights from its ongoing summer season schedule, which equals approximately 5% of all planned operations in the summer of 2022. According to the carrier, the decision was made due to a flight crew shortage.