Government Ready to Save SAS
The Swedish Government pumps another billion Swedish Crowns (136 million USD) into the loss-making Scandinavian Airlines System SAS to save it from going bust. The same amount was added last spring.
The Swedish Government owns one fifth of SAS, but only a few months ago, the Minister of Trade and Enterprise Maud Olofsson said that the company should not count on any more tax money to cover its losses.
The difference this time around, according to Olofsson, is a proper savings plan presented by the board of the company, which includes important commitments both from banks in terms of capital, and in terms of trade unions accepting pay cuts.
The Social Democrat opposition supports the centre right government's efforts to save SAS, but the Green party, which is entering the pre-election period in a coalition with the Social Democrats, wants the Government to sell off it's shares in SAS. Instead, the Greens wants the money to be invested into modernising the rail traffic. "in that way, we would solve a lot of the transport problems at least when it comes to domestic flights," Peter Eriksson, leader of the Green party tells Swedsih Radio News.
On Tuesday, SAS reported heavy losses for the fourth quarter of 2009, saying that it needs to raise 650 million dollars from its shareholders. The airline also says it aims to cut costs by 260 million dollars by expanding its savings package. SAS says the proposition is supported by the largest shareholders and a consortium of underwriting banks. It is subject to a final agreement with SAS unions and approval by an extraordinary general meeting scheduled for April. The move announced Tuesday comes a year after SAS announced a major overhaul of the company, including a 40 percent staff cut, divestments and a 720 million dollar rights issue.