COPENHAGEN: Denmark is not discussing a cash injection for loss-making airline SAS and will not do so until the Scandinavian flag-carrier has a viable business plan, government sources said on Wednesday.
Denmark, which owns a 14.3 percent SAS stake, is not currently in talks about new cash for the airline, a government source said on Wednesday.
"Now, it is about ensuring a business model for the company which makes it able to compete with low-price carriers," the source, who declined to be identified, said.
"If that happens, I would not rule out new capital for the company, but we are not there yet."
This was confirmed by a second source. SAS, which has not made a full-year profit since 2007, said last week it would cut costs and sell assets to improve revenues after media reported it was in financial difficulties.
The airline, part-owned by Norway, Sweden and Denmark, is expected to give more details on Thursday.
But many analysts believe the measures will not be enough to prevent SAS, which lost 1.6 billion crowns ($238.88 million) in 2011, from having to raise capital for the third time in four years.
Sweden, which has a 21.4 percent stake, said it expected the board and management to take the necessary measures to put the airline back on its feet.
Norway, which owns 14.3 percent, has said it would act as a responsible shareholder, but would be reluctant to contribute further cash.
All three governments took part in rights issues by SAS in 2009 and 2010 which raised around 11 billion Swedish crowns in total.
SAS has been burdened with high costs and intense competition from rivals Norwegian Air and Ryanair Soaring jet fuel prices and the global downturn have added to the pain.
The airline is expected to announce details of its cost-cutting plans on Thursday alongside the formal presentation of its third-quarter results.
Preliminary results, released last week, showed the company made a pretax profit of 568 million Swedish crowns in the third quarter.
Comments
Comments are closed.