Scandinavia’s main carrier SAS AB warned shareholders it will need to generate more funding to see it through the crisis triggered by Covid-19.
The company has halted most of its traffic and started a process to cut 5,000 jobs, it said on Thursday. SAS is in “ongoing and constructive discussions” with its “largest owners on a recapitalization plan to secure adequate levels of funding and equity for the future,” it said.
Like other airlines across the world, SAS has had to dramatically scale back its business as lockdowns and border closures triggered by Covid-19 bring air travel to a near standstill. Norwegian Air Shuttle ASA lost about $330 million before tax last quarter, it said on Thursday, as it struggles to stay afloat through the crisis.
Norwegian has lost about 90% in market value this year; Thursday’s news drove its share price down as much as 12%.
SAS has already received some financial support from Scandinavian governments, which own just under a third of its shares. But more is needed to keep the company afloat. Talks around a recapitalization plan are under way, and any solution will require its financial stakeholders having to take “burden sharing measures,” SAS said.
Late on Monday, Moody’s Investors Service cut the airline’s corporate family rating to Caa1, citing a “high risk of debt haircuts of the subordinated part of the capital structure and possibly of the senior unsecured loans.”
