STOCKHOLM (Reuters) -The Swedish authorities is not going to inject new capital into SAS, its business minister mentioned on Tuesday, dealing a blow to the loss-making airline’s restructuring efforts and sending its shares down 14% to report lows.
SAS mentioned final week a restructuring plan introduced in February trusted it elevating 9.5 billion Swedish crowns ($968 million) in money and changing 20 billion crowns of debt to fairness, warning of liquidity issues if it fell quick.
However no shareholders, together with predominant house owners Sweden and Denmark with 21.8% stakes every, have but dedicated to the service’s plan.
“We need to be clear that we are going to not inject new capital into SAS sooner or later,” Swedish business minister Karl-Petter Thorwaldsson informed a information convention.
Thorwaldsson mentioned he would, nonetheless, suggest to parliament that SAS be allowed to transform debt it owes to the federal government into fairness capital. In the long run the federal government nonetheless desires to exit SAS fully, he added.
Denmark’s finance minister, Nikolai Wammen, mentioned he had famous the Swedish choice however Danish lawmakers have been nonetheless assessing the airline’s plans and the way the state might “contribute”.
A choice is predicted by mid-June, Wammen mentioned in a written remark.
A SAS assertion mentioned that Sweden’s choice to help the debt conversion was an vital step for a metamorphosis to succeed.
Sweden has injected 8.2 billion crowns ($834 million) into the airline over latest many years, together with loans to rescue the corporate from collapse through the COVID-19 pandemic.
The service was struggling even earlier than the pandemic hammered the journey sector. Squeezed by rising competitors from low-cost carriers corresponding to Ryanair and Norwegian Air, it has sought offers with labour unions on price cuts.
“The Swedish choice places severe stress on collectors and workers to enter into agreements,” Sydbank analyst Jacob Pedersen mentioned in a notice to purchasers.
“If the corporate can’t appeal to capital, as a result of Sweden and probably Denmark received’t make investments more cash, this dangers being a step on the best way to the grave.”
Pedersen has a promote ranking on the inventory, which has misplaced 67% to this point this 12 months.
CEO Anko van der Werff final week mentioned that SAS, to draw new traders, should lower prices for leased planes that stand idle due to closed Russian airspace and gradual restoration in Asia.
SAS just isn’t alone in its post-pandemic struggles. Air France-KLM final month launched a 2.3 billion euro ($2.4 billion) share sale to spice up its capital.
($1 = 9.8127 Swedish crowns)
Reporting by Anna Ringstrom in Stockholm and Stine Jacobsen in CopenhagenAdditional reporting by Terje SolsvikEditing by Louise Heavens, Jason Neely, Emelia Sithole-Matarise and David Goodman
