European surveillance authorities are investigating whether Scandinavian Airlines (SAS) received hidden and illegal state support from the Norwegian government in connection with the long-troubled carrier’s massive cost-cutting and savings plan last year.
Norwegian Broadcasting (NRK) reported Wednesday that the European Commission has asked the EFTA Surveillance Authority (ESA) to check whether SAS accepted hidden state support when it avoided bankruptcy in the autumn of 2012. State support from EU members Sweden and Denmark is also under investigation.
Norway is not a member of the EU but is a member of EFTA (the European Free Trade Association), which allows Norway access to EU markets. Norway in turn is subject to European competition and subsidy laws.
SAS received new lines of credit amounting to SEK 3.5 billion in connection with its comprehensive cost-cutting and savings plan. Half of the financing came from the three Scandinavian governments in proportion to their ownership stakes in SAS, while the rest was put up by banks and investment companies. ESA will now determine whether the credit was extended in accordance with market terms at the time. The EU competition authorities will also examine whether the banks’ participation in the new financing was influenced by the government support.
Norwegian Trade Minister Trond Giske said he has never viewed the state credit guarantees to SAS as illegal subsidy, and noted that his Danish and Swedish colleagues saw no problem with it either. “Our participation was a commercial decision in accordance with what a normal, private investor would have done,” Giske told NRK. “The governments took part on the same terms as the banks.”
He and the other Scandinavian trade ministers said they would cooperate with the investigation and put forth their views on the issue. All felt it was important that SAS remain flying. It has since reached agreement to sell off its Norwegian short-haul airline Widerøe, raising more needed capital.
Views and News from Norway/Nina Berglund
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