The Swedish government, a major stakeholder in Scandinavian Airlines (SAS), has refused a request by the carrier for an injection of much-needed cash as part of a major restructuring deal announced in February. Both the Swedish and Danish governments have a 21.8% equity stake in SAS and Swedish industry minister Karl-Petter Thorwaldsson told a news conference that: “We want to be clear that we will not inject new capital into SAS in the future.” However, he did indicate that he would put to the Swedish parliament that SAS be allowed to convert debt into equity. Currently the Swedish government wants to extract itself completely from the ailing carrier. The Danish government is reviewing the whole situation before making any further decision.
The actions of the Swedish government may have a very beneficial knock-on effect as this should put considerable pressure on creditors and employees to enter into agreements. The restructuring plan announced in February included 9.5 billion Swedish crowns (£773 million) in cash and converting 20 billion crowns of debt to equity. SAS also warned at the time that liquidity problems could well arise if the restructuring fell short of targeted sums. During the pandemic Sweden injected 8.2 billion crowns to keep SAS afloat, but the carrier was already struggling to compete with the likes of Norwegian Air and Ryanair prior to the outbreak. CEO Anko van der Werff said last week that to attract new investors, SAS must cut costs for leased planes that stand idle because of closed Russian airspace and slow recovery in Asia.