The airline SAS share hit a record low as Sweden says no to more cash
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STOCKHOLM, June 7 (Reuters) – The Swedish government will not inject new capital into SAS (SAS.ST), said its Minister of Industry on Tuesday, beating the loss-making airline’s restructuring efforts and sending its shares down 14% to all-time low levels .
SAS said last week that a restructuring plan announced in February was due to the fact that it would collect SEK 9.5 billion ($ 968 million) in cash and convert SEK 20 billion of debt into equity, which warned of liquidity problems if there were to be short. Read more
But no shareholders, including the main owners Sweden and Denmark with 21.8% each in the shipping company, have committed to the plan.
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“We want to be clear that we will not provide SAS with new capital in the future,” said Sweden’s Karl-Petter Thorwaldsson at a press conference.
The Minister said that he would, however, propose to the Riksdag that SAS should be allowed to convert its debts to the government into equity. In the long term, the government still wants to leave SAS altogether, he added, repeating a year-long stance.
The airline said in a statement that Sweden’s decision to support the debt conversion was an important step for a conversion to succeed.
In recent decades, Sweden has injected SEK 8.2 billion (USD 834 million) into the airline, including through loans to save the company from collapse during the covid-19 pandemic when global air travel almost stopped.
The airline was already fighting before the pandemic in the face of increasing competition from low-cost airlines such as Ryanair (RYA.I) and Norwegian Air (NAS.OL), and has sought agreements with trade unions on cost reductions.
“The Swedish decision puts serious pressure on creditors and employees to enter into agreements,” says Sydbank’s analyst Jacob Pedersen in a statement to customers.
“If the company can not attract capital, because Sweden and possibly Denmark will not invest more money, this risks being a step on the way to the grave,” says Pedersen, who has a sales rating on the share which has fallen 67% so far this year.
The Danish Ministry of Finance could not immediately comment. The Danish government has previously said that it sees itself as a long-term owner of the group.
CEO Anko van der Werff said last week that in order to attract new investors, SAS must reduce the costs of leased aircraft that are unused due to the closed Russian airspace and slow recovery in Asia.
SAS is not alone in fighting to get back on its feet after the pandemic. Another airline seeking shareholder support is Air France-KLM (AIRF.PA), which launched a € 2.3 billion ($ 2.4 billion) share sale in May. Read more
($ 1 = 9.8127 Swedish kronor)
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Reporting by Anna Ringström in Stockholm and Stine Jacobsen in Copenhagen, further reporting by Terje Solsvik; editing by Louise Heavens, Jason Neely and Emelia Sithole-Matarise
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