SAS and Norway crisis packages turn into a disaster against the giant’s billions of packages – E24

The Corona virus has eradicated much of the international passenger air traffic. April experienced a 73 percent drop in traffic compared to April last year, according to Flight radar24.

In response, authorities around the world have provided emergency packages to their affected airlines, and a total of at least NOK 875 billion, according to a Bloomberg survey.

Here, the government has launched a SEK 6 billion government loan guarantee, half of which is specifically targeting Norway, and one and a half billion potentially can go to SAS and Widerøe.

On Monday, it became clear that Norwegian had shareholders approve a crisis plan, giving the affected company access to NOK 2.7 billion in government loan guarantees.

On Tuesday, SAS reports that it has entered a so-called revolving credit line of SEK 3.3 billion with a maturity of three years.

The loan is guaranteed up to 90 percent from the Swedish and Danish state.

CFO Torbjørn Wist states in the report that the company is still working to obtain a NOK 1.5 billion loan guarantee from the Norwegian authorities.

Fighting the bankrupt ghost

In the Norwegian authorities package, Norwegian received a $ 300 million line of credit, but to get the last $ 2.7 billion, the company had to meet several difficult requirements.

Among other things, Norwegian must increase the capital ratio and persuade creditors to forgo interest and defer payments for a period.

Norwegian fought a tough fight to avoid bankruptcy and has previously stated that the state rescue package is as good as the only rescue.

So the last pieces fell into place on Monday after several days of drama.

Even without an account loan

The SAS competitor is also hit by the blow in aviation.

Sweden and Denmark have provided a total of SEK 3 billion in loan guarantees, in addition to the SEK 1.5 billion credit guarantee from the government.

Recently, SAS chief Rickard Gustafson said the company has so far seen nothing about the krones promised by Norwegian, Swedish or Danish authorities.

You don’t think traffic will be “normal” again until 2022.

– I have to be honest to say that today I don’t know exactly how this will be. We must be flexible and adapt to future developments in demand. We have never seen a situation like this before and we do not know what the authorities of different countries will allow to travel in the future, Gustafson said in an interview with E24 last Tuesday.

“I think domestic service will come back faster than long distance and I think traveling in Scandinavia will come back faster than traveling abroad in Europe, but that is a pure assumption on my part about where we are now,” he added.

On Tuesday, SAS announced plans to permanently reduce the workforce by 5,000 jobs, including 1,300 in Norway.

He will take the rescue packages to the European Court of Justice

An opponent of state rescue packages is Irish Ryanair. The company itself does not apply for any state aid plan, and believes that state aid in the airline industry violates EU regulations, and has recently been opened to try the case in the Court of Justice of the European Communities.

“When Ryanair returns to significant flights from July, the competitive landscape in Europe will be distorted by a large volume of state aid from some EU countries to their ‘national’ airlines. At the moment, this amounts to more than 30 € 1 billion, in addition to salary support, mainly to the Lufthansa Group, Air France-KLM, Alitalia, SAS and Norwegian, ”Ryanair wrote in a statement on Friday.

The company also announced that 3,000 employees will lose their jobs, and they don’t believe air traffic will normalize until the summer of 2022.

American, Delta, United and Southwest

American Airmen were granted their own support schemes in the approximately NOK 23 billion giant rescue package from the United States government.

Recently, Finance Minister Steven Mnuchin and the ten largest airlines in the United States agreed on a $ 257 billion crisis package.

American Airlines, the largest of the US airlines, receives approximately $ 60 billion in wage subsidies and is negotiating a further $ 49 billion in loan guarantees, Bloomberg writes.

Of the approximately 130,000 company employees, nearly 40,000 volunteered, reduced their hours, or retired early.

According to Bloomberg, Delta’s competitor receives NOK 56 billion in wage subsidies and applies for a SEK 47 billion government loan, but will have until September to decide whether to accept the loan.

A third of the company’s 100,000 employees have taken vacations without pay.

United Airlines has been severely penalized on the stock exchange, so far this year it has dropped 70 percent. The company expects to receive $ 51 billion in grants and low-interest loans, and is also seeking $ 46 billion in additional loans. 20,000 employees have been laid off so far.

American and Delta stock prices are down more than 50 percent, while Southwest stocks are “only” down 42 percent.

Air France-KLM

Bloomberg writes that the Franco-Dutch airline will receive up to NOK 123 billion from the French and Dutch authorities.

So far, KLM has planned to cut 2,000 employees, and has largely laid off. Air France has yet to launch plans to reduce the workforce.

So far this year, stocks have fallen more than 50 percent, and CEO Ben Smith believes it will be two years or more before the aviation industry returns to the heights, Bloomberg writes.

Lufthansa

Germany’s Lufthansa could probably expect a $ 114 billion rescue package from Germany, Switzerland and Austria, writes Reuters.

As a result of the rescue package, the German state can take 25.1 percent of the company’s shares, German Der Spiegel wrote Friday.

The company has dropped 50 percent on the stock market so far this year. CEO Carsten Spohr has stated that the airline will cut 10,000 jobs as a result of the crisis. The airline has already laid off 90,000 of its 135,000 employees, writes the Financial Times.

Emirates and Etihad

The two United Arab Emirates airlines, Emirates and Etihad, are treated differently. While Dubai-based Emirates, according to Reuters, will receive financial support from Dubai authorities, Abu Dhabi-based Etihad has yet to receive any sign of state support.

In a joint statement on Thursday, the airlines say they don’t expect air traffic to return to levels before the crown crisis until 2023.

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