The Swedish government will not inject more capital into struggling Scandinavian airline SAS, the country’s industry minister said on Tuesday.

The announcement came a week after SAS said it was seeking to raise 9.5 billion kronor (€904 million) in new capital.

“Given the government’s mandate to reduce its stake (in SAS), we say no to an injection of capital in the SAS Forward (restructuring) plan,” Industry Minister Karl-Petter Thorwaldsson said at a news conference. He added that the state would not be a long-term shareholder in the company.

Sweden and Denmark are SAS’s main shareholders, with each holding 21.8 per cent stakes, which rose in the past two years following rescue plans linked to the COVID pandemic.

The Swedish government will propose to the parliament that SAS be authorised to convert the debt it owes to the state into equity capital, Thorwaldsson said. In a statement, SAS said that move was “an important step toward the success” of its transformation plan.

In February, the airline launched a major cost-cutting plan dubbed “SAS Forward”, which included a “redesigned fleet” and a “refocusing” on long-haul flights.

In February, the airline launched a major cost-cutting plan dubbed “SAS Forward”, which included a “redesigned fleet” and a “refocusing” on long-haul flights

Hit hard by the pandemic, SAS already cut 40 per cent of its workforce – 5,000 staff – in 2020.

The airline posted a net loss of 1.5 billion Swedish kronor (€145 million) in the second quarter, compared to a net loss of 2.4 billion kronor a year earlier.