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Sweden and Denmark dig deeper to save SAS

The Swedish and Danish governments have agreed to stump up more cash to bail out ailing airline SAS in a recapitalisation plan that was finalised on Friday, the Scandinavian carrier announced.

Sweden and Denmark dig deeper to save SAS
A SAS aircraft parked at Copenhagen Airport in May this year. Photo: Liselotte Sabroe/Ritzau Scanpix

SAS, which like other airlines around the world has been hit hard by the economic fallout from the coronavirus pandemic, said that Stockholm and Copenhagen have agreed to increase their respective stakes in the carrier to 21.8 percent apiece as part of the rescue plan first unveiled in August. 

The package includes some 12 billion Swedish kronor (1.16 billion euros) of fresh funding and the conversion of a further 2.25 billion kronor of debt into equity.

Previously, Sweden had held a stake of 14.8 percent in SAS and Denmark 14.2 percent.

But analysts suggested that a lack of sufficient interest on the part of other investors compelled the governments to step in and fill the gap.

“Investors have not lined up to buy SAS shares, and the governments have helped SAS reach the goal,” said Sydbank analyst, Jacob Pedersen.

READ ALSO: Norway to sell remaining SAS airline stake

SAS's chief executive Rickard Gustafson said he was “grateful for the support from our largest owners, the government of Sweden, the government of Denmark and Knut and Alice Wallenberg's Foundation, that they have demonstrated throughout this recapitalisation process.”

Faced with a grounding of most of its fleet, SAS already announced in April that it would cut 5,000 staff — equivalent to 40 percent of its workforce.

The negotiations for those redundancies had now been completed, a company spokeswoman told AFP.

After having fallen to near zero in April, the airline is still operating at severely reduced capacity.

In September, monthly revenues were down by more than 85 percent to 448 million kronor.

“Looking ahead, our focus is to execute on our business plan aimed at adapting SAS to a market defined by lower demand, and to return as a profitable and more sustainable airline as the world recovers from the Covid-19 pandemic,” CEO Gustafson said.

Several other European governments have had to come to the rescue of their own flag carriers, such as France's Air France and Germany's Lufthansa.

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TRAVEL

Could Oslo-Copenhagen overnight train be set for return?

A direct overnight rail service between the Norwegian and Danish capitals has not operated since 2001, but authorities in Oslo are considering its return.

Norway’s transport minister Knut Arild Hareide has asked the country’s railway authority Jernbanedirektoratet to investigate the options for opening a night rail connection between Oslo and Copenhagen.

An answer is expected by November 1st, after which the Norwegian government will decide whether to go forward with the proposal to directly link the two Nordic capitals by rail.

Jernbanedirektoratet is expected to assess a timeline for introducing the service along with costs, market and potential conflicts with other commercial services covering the route.

“I hope we’ll secure a deal. Cross-border trains are exciting, including taking a train to Malmö, Copenhagen and onwards to Europe,” Hareide told Norwegian broadcaster NRK.

The minister said he envisaged either a state-funded project or a competition awarding a contract for the route’s operation to the best bidder.

A future Oslo-Copenhagen night train rests on the forthcoming Jernbanedirektoratet report and its chances of becoming a reality are therefore unclear. But the Norwegian rail authority earlier this year published a separate report on ways in which passenger train service options from Norway to Denmark via Sweden can be improved.

“We see an increasing interest in travelling out of Norway by train,” Jernbanedirektoratet project manager  Hanne Juul said in a statement when the report was published in January.

“A customer study confirmed this impression and we therefore wish to make it simpler to take the train to destinations abroad,” Juul added.

Participants in the study said that lower prices, fewer connections and better information were among the factors that would encourage them to choose the train for a journey abroad.

Norway’s rail authority also concluded that better international cooperation would optimise cross-border rail journeys, for example by making journey and departure times fit together more efficiently.

The Femahrn connection between Denmark and Germany, currently under construction, was cited as a factor which could also boost the potential for an overland rail connection from Norway to mainland Europe.

Night trains connected Oslo to Europe via Copenhagen with several departures daily as recently as the late 1990s, but the last such night train between the two cities ran in 2001 amid dwindling demand.

That trend has begun to reverse in recent years due in part to an increasing desire among travellers to select a greener option for their journey than flying.

Earlier this summer, a new overnight train from Stockholm to Berlin began operating. That service can be boarded by Danish passengers at Høje Taastrup near Copenhagen.

READ ALSO: What you need to know about the new night train from Copenhagen to Germany

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