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Thursday, April 18, 2024

Norway asked to reinvest in SAS

The largest private owner of Scandinavian Airlines (SAS) is asking the Norwegian government to “do more” to keep SAS flying, even if it means becoming a major shareholder once again. Investor Jacob Wallenberg’s call is already being answered by opposition parties in the Norwegian Parliament, with the Labour Party open to all efforts to save SAS from bankruptcy.

Calls are rising, also in Norway, to save Scandinavian Airlines (SAS), also if it means the Norwegian government re-acquiring an ownership stake in the airline that’s been mostly grounded by the Corona virus crisis. PHOTO: Oslo Lufthavn

“We’re not going to send big checks to Wallenberg and other private owners,” MP Sverre Myrli of Labour told newspaper Dagens Næringsliv (DN), “but the situation is serious and can demand that we evaluate structural changes.”

Myrli, who sits on the Parliament’s transportation committee, said he wouldn’t rule out  re-acquiring a stake in SAS if that’s what’s needed to keep the airline flying. That would reverse years of deregulation and privatization of once-national carriers like SAS.

Labour and other opposition parties in Parliament, including the conservative Progress Party, have already formed a majority to push through more emergency aid to the three airlines with domestic routes in Norway: SAS, Norwegian Air and Widerøe. The government has also promised NOK 3 billion worth of loan guarantees to Norwegian and has basically chartered aircraft and crews from all three airlines to keep flying important routes around Norway during the Corona virus crisis that has otherwise halted travel all over the world.

Critical part of transport system
Most all agree with Wallenberg that airlines are strategically important and a critical part of transportation infrastructure in Norway. The country’s mountainous topography and thousands of islands make rail and road transport difficult in many areas. Distances are also vast, with cities in Northern Norway as far from Oslo as those in Italy.

DN reported that Norway also has remained SAS’ largest home market, with nearly 40 percent of all of SAS routes within, to or from Norway. It’s also been a lucrative market over the years because of Norwegian passengers’ affluence and penchant for travel.

Now Wallenberg, one of three family members running the powerful Wallenberg conglomerate in Sweden that’s currently SAS’ biggest shareholder, is specifically calling on Norway to join the Swedish and Danish governments in offering more immediate financial assistance to SAS. Both Sweden and Denmark remain owners of SAS, while Norway sold off its remaining holdings in 2018.

Wallenberg told Swedish newspaper Dagens Industri recently that the Swedish and Danish goverments should initiate a new stock issue to raise fresh capital for SAS. He told the Oslo-based DN that all three Scandinavian countries should share responsibility for saving SAS, which unlike already-troubled Norwegian Air had been doing well before the Corona crisis hit.

Loans are not enough
SAS’ management has openly stated that the airline’s existence is now threatened. It has received loan guarantees in Sweden and Denmark but can’t survive only with new loans. Fresh capital and cash are needed as well, and Labour’s Myrli wants Norwegian authorities to meet with their Danish and Swedish counterparts to discuss rescue measures.

So does MP Bård Hoksrud of the Progress Party, which was part of Norway’s conservative government coalition until January. He’s also a member of the transport committee in Parliament and thinks the state needs to view the airlines’ problems collectively. “We’re caught in an extreme situation,” Hoksrud told DN. “I wouldn’t reject a proposal for state ownership, but it’s too early to conclude.”

The national airline employers organization NHO Luftfart has predicted more huge looming losses for the airlines this summer, their most important season of the year that’s set to suffer from ongoing Corona containment measures. NHO claims crisis loans won’t be enough to keep them aloft, and that capital and cash infusions are essential.

Government officials haven’t been willing to respond to Wallenberg’s call for more aid for SAS, or to the opposition’s willingness to consider buying a new stake in SAS. “The state must make sure the risk of loss isn’t too high,” a spokesperson for the business and trade ministry told DN. “If there’s a need for more crisis measures for aviation or other areas of the economy, we’ll come back to it.” There are no new measures to help the airlines in the state’s revised state budget for the rest of the year. Berglund



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