Airline SAS agrees $1.5 billion financial boost with investors

STOCKHOLM (Reuters) - Scandinavian airline SAS SAS.ST has agreed a 14.25 billion Swedish crown ($1.5 billion) plan with top shareholders including Sweden and Denmark to shore up its finances against the collapse in air travel during the COVID-19 pandemic.

Scandinavian Airlines (SAS) Airbus A320 planes are parked at Copenhagen airport in Kastrup, Denmark, March 15, 2020. TT News Agency/Johan Nilsson via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. SWEDEN OUT. NO COMMERCIAL OR EDITORIAL SALES IN SWEDEN.

The plan, also backed by a foundation attached to the business empire of Sweden’s Wallenberg family, will secure around 12 billion crowns in new funding. It is the latest aid package in an industry that has been crippled by travel restrictions and is bracing for a long, slow recovery.

“This is well in line with what we have been thinking we need to get through this, and to restore our funds to something resembling what it was before the crisis,” CEO Rickard Gustafson told Reuters on Tuesday.

Elsewhere, Germany is set to take a 20% stake in Lufthansa LHAG.DE, while Norwegian Air NWC.OL recently completed a 12.7 billion Norwegian crown ($1.30 billion) debt conversion and share sale.

SAS’s plan includes a deeply discounted share issue to its main owners and a broader rights issue, as well as new hybrid notes and the conversion of bonds.

“For current shareholders, it is a choice between the plague and cholera. If you do not join and subscribe for new shares, a massive dilution will occur,” said Nordnet analyst Per Hansen, pointing to the rights issue price of 1.16 crowns per share, which compares with Monday’s closing price of 8.88 crowns.

At 0838 GMT, SAS shares were down 9% at 8.04 crowns, taking year-to-date losses to around 50%.

The airline, which Gustafson said would have 35-40 planes in the air this summer against around 150 normally, does not see traffic returning to near pre-pandemic levels until 2022.

Norway, which sold its last stake in SAS in 2018, will pay the airline to continue its network in the country, and has offered loans to the sector, but is not part of the recapitalisation plan.

($1 = 9.3425 Swedish crowns)

($1 = 9.7470 Norwegian crowns)

Reporting by Anna Ringstrom and Niklas Pollard; Additional reporting by Simon Johnson and Jacob Gronholt-Pedersen; Editing by Jason Neely and Mark Potter