The European Commission has granted approval for a €833 million (SEK 9.5 billion) state aid measure for the recapitalisation of Scandinavian Airlines System (SAS), a decision made under the State aid COVID Temporary Framework. Originally notified by Denmark and Sweden in August 2020, the recapitalisation was part of a broader package that involved substantial participation from private investors, including the conversion of privately held debt instruments into equity.
The initial notification in August 2020 outlined a State recapitalisation of up to €1 billion (SEK 11 billion). Following the Commission’s decision on August 17, 2020, which deemed the measure compliant with EU State aid rules, the recapitalisation eventually amounted to approximately €833 million. Denmark contributed around €460 million (SEK 5.25 billion), and Sweden provided approximately €373 million (SEK 4.25 billion), reflecting the high interest from private investors.
However, on May 10, 2023, the General Court annulled the decision, citing the lack of a step-up mechanism to increase remuneration and incentivise the exit of the states in line with the COVID Temporary Framework. Subsequently, on July 4, 2023, the Commission initiated an in-depth investigation into this matter.
In the recent decision, the Commission determined that the proposed mechanism by SAS aligns with the COVID Temporary Framework, leading to the approval of the measure. The condition is that the mechanism is implemented within two months from the notification of the decision to the respective Member States.
The recapitalisation plan involves approximately €175 million (SEK 2 billion) in equity participation through the subscription of new shares, divided between Denmark and Sweden. Additionally, around €526 million (SEK 6 billion) in newly issued State hybrid notes, with features of an equity instrument non-convertible into shares, will be allocated, with approximately €219 million (SEK 2.5 billion) for Sweden and €307 million (SEK 3.5 billion) for Denmark. Another approximately €131 million (SEK 1.5 billion) in equity participation will come through the subscription and underwriting of new shares in a rights issue, shared between Denmark and Sweden. (£1.00 = €1.16/SEK13.23 at time of publication).
