dinavian airline SAS yesterday asked shareholders for 5bn Swedish crowns (£428m) to keep it flying and reported a bigger than expected quarterly loss, sending its shares diving to an 18-year low.
SAS, half-owned by the governments of Denmark, Norway and Sweden and one of the worst hit by the crisis in the aviation industry, said the rights issue was needed to allow it to take out yet more costs as it battles back into profit.
The sovereign shareholders plan to take up their rights, but a group of low-cost carriers – which lodged a complaint with the European Commission after an earlier 6bn crown SAS cash call in November, 2009 – criticised the move as anti-competitive.
EasyJet branded it “illegal state support”.
SAS said it would pare another 2bn crowns from costs, on top of more than 5bn already promised under its “Core SAS” programme, itself the latest in a long line of attempts to make the airline competitive with low-cost fliers.
Weak demand and falling passenger numbers led to a fourth-quarter pretax loss of 1.52bn crowns.
Sweden, which has the largest government stake in SAS, said it was not opposed to selling if market conditions allowed.
SAS said the rights issue was supported by its largest shareholders and a consortium of underwriting banks.
Last year was the worst ever in terms of airline industry demand, according to the International Air Transport Association (IATA). IATA believes the bottom has passed but 2010 offered enormous challenges with the downturn forcing companies and individuals to slash travel budgets. SAS was struggling before the financial crisis with an aging fleet, higher costs than many rivals, and unions opposed to its efforts to streamline the business.