Foreign Investors Struggle to Find Scandinavian Airline SAS

Senior executives at Scandinavian Airlines continue to face problems. Many in the industry are questioning the future of the airline after thousands of cancellations, angry pilots unions and delays to new aircraft.

According to recent reports, foreign investors may be interested in buying the airline. However, there are significant financial conditions.

Although financial conditions are improving, there are still large losses.

Experts are skeptical about the ambitious transformation plan that CEO Anko Van der Werff unveiled earlier in the year and which was further elaborated following recent poor financials.

SAS reported last week a loss of $164million on operating revenues $720 million in the second quarter of accounting that ran February through April. It was a significant improvement over the quarter before it and the quarter before that, but a sustainable business model remains a long way away.

After the announcement of quarterly results, financial turmoil continued. The Oslo Stock Exchange announced on June 2 that SAS AB shares would be subject to additional supervision through its “recovery-box” mechanism. This is used when pricing of securities is “particularly uncertain.”

A “unrealistic” plan for transformation

Hans-Erik Jacobsen, Nordea’s analyst, told NRK that the airline’s rescue plan was unrealistic. He added that the plan to raise 9.5 million Swedish kronor and convert debt and hybrid bonds into shares to 20 billion Swedish kronor “seems impossible.”

Foreign investors could be a potential solution

According to the Swedish newspaper Dagens Industrial, a group foreign investors hired advisers with the goal of takingover SAS. The investment would only be made if there is a comprehensive corporate restructuring in accordance with SAS’s plan.

Details are scarce on the ground, but any possible deal would be of interest to the governments in Denmark and Sweden. They still own the airline but have been reluctant to provide continued state support.

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