Sweden's Government has taken an initial step towards cutting its shareholding in SAS Group, although it has done so in parallel with backing the struggling company's new rights issue.
The Government is to put a bill before the Swedish Parliament proposing that it will participate in the SKr5 billion ($693 million) share issue planned by SAS Group.
But the Swedish enterprise ministry, led by deputy prime minister Maud Olofsson, says it will also request a mandate to cut the state's ownership of SAS "at the appropriate time".
The bill to Parliament proposes that the Government be authorised to reduce its shareholding either by disposing of "all or part" of its stake or through dilution of ownership.
It adds that it has informed the Norwegian and Danish Governments - each of which has a 14.3% share in SAS - of its intention to seek parliamentary authority for the divestment.
While a sale of the stake is not an immediate prospect, Olofsson says: "We ultimately see no intrinsic value in owning shares in an airline. We therefore want to secure a parliamentary mandate to reduce ownership when we see that this is commercially feasible."
But in the interim the bill proposes that the Swedish state takes its pro rata share of the rights issue, which will be conducted in April.
Sweden's Government holds a 21.4% share of SAS Group which means it would have to invest SKr1.1 billion if the issue is fully exercised.
The bill sets out the reasons for SAS Group's share issue, citing the company's efforts to overcome its "inadequate economic development" since 2001 - notably its current 'Core SAS' turnaround programme to cut costs and concentrate on its Scandinavian airline operation.
"The Government's analysis shows that a participation in the rights offering is expected to provide a market return," says the bill, based on measures proposed in SAS Group's latest business plan.
Olofsson says that the company must continue its efforts to increase efficiency, adding: "It is absolutely necessary to create a competitive SAS."
In its bill the Government adds that its proposal is consistent with measures which would be taken by a private investor, and that the Government's assessment has concluded that the measures would not amount to state aid as defined by the European Union.
Source: Air Transport Intelligence news
