SAS secures $361mn credit line from Sweden, Denmark

SAS Scandinavian Airlines (SK, Copenhagen Kastrup) has secured further support from the governments of Sweden and Denmark, its two biggest shareholders, in the shape of access to a SEK3 billion (USD361 million) credit line, with strings attached, the airline announced on May 26. The loan guarantee, which the ailing carrier said “is designed to create a liquidity buffer,” must meet European Union state aid rules – and is subject to EU approval – and the aid should be seen as a complement to other ongoing efforts to cut costs and strengthen liquidity. “The ongoing Covid-19 pandemic has led to a low level of demand for flights over an extended period. Market conditions also make it difficult to predict how demand will develop ahead of the important summer season given that customers are increasingly choosing to book their trips at short notice. The prevailing uncertainty means that access to liquidity is essential for all airlines,” SAS explained in a statement. The Danish and Swedish governments will each guarantee SEK1.5 billion (USD180.5 million), their respective ministries of finance and trade and industry said in separate statements. Denmark’s minister of finance, Nicolai Wammen, said: “It is still the government’s position that SAS is important for Denmark’s accessibility, Danish jobs, companies, and the Danish economy in general,” adding that “as a long-term and responsible co-owner, the Danish state will continue to follow SAS’s development closely.” In its statement, the Swedish government stressed it was “critical that SAS becomes a long-term profitable and sustainable company after this crisis.” Stockholm “has previously set strict climate and environmental requirements on SAS in connection with the recapitalisation. As a result, the company has tightened its climate goals to contribute to meeting the goals of the Paris Agreement. The government’s expectations as owner are that SAS’s climate work will be carried out in line with the plan that has been communicated. […] Aviation emissions must be reduced.” With a SEK14 billion (USD1.68 billion) recapitalisation plan agreed in late 2020, the two governments each hold 21.8% stakes in SAS Group, with private shareholders holding the remainder. The Norwegian government sold its remaining 9.88% stake in June 2018. SAS released its second-quarter results on May 27, posting a smaller loss before tax for its February-April quarter year-on-year, of SEK2.36 billion (USD284 million). It said that “the increase in vaccination rates provides some hope for a relaxation of restrictions and an increase in demand ahead of the important summer season.” The airline will operate 180 routes this summer and increase capacity on domestic routes within Scandinavia, it added. According to the ch-aviation capacities module, SAS has 94 routes in operation as of the week starting May 31.