The Swedish Government announced today that it is ready to provide Scandinavian triple flag-carrier SAS with an additional $500 million (SEK 5 billion) in aid. But the capital injection does not come without its green strings attached.
At a press conference early Monday morning, the Swedish Government said that it is ready to come to its struggling airline’s aid once more. SAS, vital to the region’s connectivity, is thus granted another lifeline. However, the country that invented the concept of “flight shame” intends to make it work for the bailout.
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Reduce emissions to match Paris agreement
Minister for Financial Markets and Housing, Per Bolund, said that the decision signaled that the government is embarking on a “total shift towards sustainability” for Swedish aviation.
Bolund, himself a member of the Swedish Green Party which forms part of the coalition government, further stated that the conditions would force SAS to adapt its environmental commitments to bring them in line with the goals of the Paris agreement.
“The government will initiate a dialogue with other major SAS shareholders to ensure strict environmental demands,” Bolund said, according to Swedish newspaper Svenska Dagbladet (SvD).
“The company must decrease its emissions, and it has to be done clearly and in line with the Paris agreement. This needs to happen distinctly and very quickly. We are entering a new environmental era for Swedish aviation,” he continued.
Not detailed enough, some say
However, Bolund did not provide details as to how this would be accomplished, other than that it would most likely include a swift transition towards biofuel for domestic traffic.
This is something Swedish Left Party leader Jonas Sjöström was not too happy about. He would have liked to have seen much more specific demands. For instance, cutting routes where there are train connections available in under four hours, something akin to what the French government asked of Air France in return for aid.
“This is a chance for a green pivot. I feel one has to be more concrete.” Sjöström said, following the announcement.
A spokesperson for the airline said that it welcomes the government’s sustainability targets, which they said were completely in line with the carrier’s own ambitious plans to lessen the environmental impact of the aviation industry.
Expecting other owners to contribute
The government was also vague about how much it would increase its ownership. Swedish Minister for Enterprise, Ibrahim Baylan, was quoted by SvD as saying that, as owners, the Swedish State was ready to step in and take responsibility to save its national airline. However, it expects other owners also to play their part.
The Swedish and Danish Governments own about 14.5% each of SAS. They have previously granted SAS $334.45 million combined in state-guarantees. Now, the latest bailout ball is in the court of the Danes, and other major shareholders.
The third-largest owner is the Knut and Alice Wallenberg Foundation, which holds 6.5% of shares. However, the foundation has so far said “not so fast” to participating in the rescue mission.
“We have yet to see any recapitalization plan,” Oscar Stege Unger, a representative of the foundation as well as SAS board member, told SvD. “When one will be presented, we will have something concrete on which to base our decision.”
Plan ready by the end of June
Rickard Gustafson, the SAS CEO, has previously said that a plan would be ready before the end of June. The airline estimates that the recapitalization will encompass new funding needs of some $1.35 billion (SEK 12.5 billion).
The state-aid news caused the airline’s stock value to climb, increasing by 4.5% before noon on Monday. However, before the airline can make use of the cash injection, it has to be approved both by the Swedish Parliament and by the European Commission.