MIAMI – As SAS Scandinavian Airlines (SK) seeks US$1.3bn in new funding, the Swedish and Danish governments have agreed to offer capital financing to help with its recapitalization plans.
The funding process will include internal, external and financial stakeholders negotiations as part of the airline’s agenda and required executive measures.
Need of a recapitalization also shared by governments
Due to the impact of the COVID-19 crisis on its revenues, the Scandinavian carrier entered in dialogues with its shareholders in May while its Board of Directors approved a new business strategy to maintain the airline afloat.
Even with a reduction of its workforce by 5,000, productivity improvements by 15-25% among other cost-saving measures, the carrier was still in need of recapitalization funding.
In agreement with this, the Danish government announced a political agreement and the Swedish approved US$1.3bn in financial support.
The restructuing has been closely followed by both governments as Sweden holds 14.8% of the company’s stakes while Denmark holds 14.2%.
The airline said it would continue seeking funding from the Norwegian government, being also its flag carrier. Unlike the above-mentioned countries, Norway sold the last of its stakes in SK back in 2018.
Expected future for the airline
While the carrier said in a statement that the aim of the plan was to ensure that it was fully funded and that shareholders’ equity would be at regular levels as those prior to the crisis, it also said it expected the plan to help it return to normal capacity within two years.
By that time, SK should have also changed other aspects of its business model as Sweden stated that it would only support the company in light of the airline’s announced goal to implement tougher emissions standards.
Regarding this greener view of the future of aviation, Financial Markets Minister Per Bolund said that airlines’ quantitative targets for reduced emissions should be set in line with the Paris Climate Agreement target of 1.5°.
On a final note, the recapitalization plan also includes renegotiations related to the company’s marketing, contracts, and fleet models.