Airline SAS said on Thursday it was in talks with major shareholders to raise more money to help it ride out the pandemic-induced collapse in global air travel after reporting bigger losses in its second quarter.
Sweden and Denmark, part owners of SAS, have already stepped in to aid the airline, guaranteeing a 3.3 billion crown (280.59 million pounds) credit facility, but SAS Chief Executive Rickard Gustafson said more would be needed given the scope of the crisis.
“SAS is currently in active, intensive and constructive discussions with the company’s major shareholders and selected stakeholders on a recapitalisation plan to ensure the future of SAS,” Gustafson said in a statement.
The global airline industry is struggling to cope with fallout from the COVID-19 outbreak, with widespread lockdowns and travel restrictions forcing carriers to ground their fleets.
When asked for more details on the funding needs, Gustafson declined to give more information, but said it was clear the amount would be “significant”.
Gustafson said the company aimed to present a plan to the market in June.
SAS shares were down 9 per cent by 0806 GMT, taking year-to-date losses to 35 per cent. The shares are up 15 per cent on the week.
SAS said losses before tax in the February-April quarter rose to 3.72 billion Swedish crowns ($387.4 million) from 1.22 billion a year earlier.
SAS last reported a profit in its August–October 2019 quarter.
The airline, facing tough competition from low-cost rivals, had already been restructuring and making cost savings before the coronavirus pandemic hit the airline industry.
Some airlines are now preparing to resume flights as some countries start to ease coronavirus restrictions. Earlier this week, SAS said it would resume flights to several destinations from June onwards.
“We expect that the recovery will start with increased domestic demand followed by European and then intercontinental destinations,” SAS said.
“But, it will most likely take until 2022 before we see demand in line with what we experienced before the COVID-19 outbreak.”
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.