• SAS A350
    SAS
    IATA/ICAO Code:
    SK/SAS
    Airline Type:
    Full Service Carrier
    Hub(s):
    Copenhagen Airport, Oslo Gardermoen Airport, Stockholm Arlanda Airport
    Year Founded:
    1946
    Alliance:
    Star Alliance
    Airline Group:
    SAS Group
    CEO:
    Anko van der Werff

The Norwegian government will consider allowing SAS to convert its debt into equity after granting the airline 1.5 billion Norwegian crowns ($153 million) in loans over the COVID-19 pandemic. We explore what this all means below.

Norway will allow debt-to-equity conversion

Norway's government will not pump any more capital into SAS but will support a plan that would see debts owed by the carrier converted into equity.

Norwegian Industry Minister Jan Christian Vestre says this could happen "under certain conditions." What exactly these conditions are is being kept under wraps as it is considered market-sensitive information.

SAS markets 70% red
Photo: Getty Images

Vestre declined to confirm whether a resolution to the ongoing dispute between SAS and trade unions would be part of these conditions.

As reported in FlightGlobal, Vestre said,

"Given the situation of the company, we can – under certain terms – accept to convert outstanding debt into shares if we consider this necessary. This presupposes that the restructuring plan is sufficient and that all actors contribute to finding solutions."

Earlier this month, the Swedish government announced its support for a similar debt-to-equity conversion, adding that SAS won't receive any more cash from Sweden.

Norway provided around 1.5 billion Norwegian crowns ($153 million) in loans to SAS to help the carrier stay afloat during the pandemic downturn.

No plans to be a long-term shareholder

Industry Minister Vestre made it clear that the Norwegian government does not plan to remain a long-term shareholder in SAS if it goes ahead with converting its debt holdings into shares.

This is in line with Sweden's position, which has encouraged the airline to raise capital through other means.

Vestre added,

"It is important to carry out a restructuring that provides long-term competitiveness and profitability and the prerequisites for being able to continue [SAS’s] central position in the Norwegian and Nordic aviation markets."

However, Denmark has intimated it will increase its stake in the airline, which serves as the flag carrier of Norway, Denmark and Sweden.

While Denmark and Sweden both hold a 21.80% stake in the airline, Norway sold off its holdings in SAS back in 2018.

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The restructuring continues

As Simple Flying reported earlier this year, SAS plans an extensive transformation that will entail "a full transformation of its business."

A SAS Boeing 737-800 aircraft parked.
SAS acquired debt financing last week as it undergoes bankruptcy proceedings in the US. Photo: Getty Images

The airline's SAS FORWARD restructuring plan will involve major cost-cutting measures, attracting new investors and a swift transition to an all-Airbus fleet.

SAS said,

"Today’s announcement from the Norwegian Government, regarding its intention to support our transformation plan SAS FORWARD by converting its debt holding into SAS equity, is appreciated and an important step towards the success of SAS FORWARD."

How do you see the rest of 2022 playing out for SAS? Let us know your insights in the comments.

Source: FlightGlobal