In view of the losses reported in 2009, SAS, the Scandinavian airline group has decided to issue new shares to raise its capital and cut 700 jobs.
SAS lost 1.3 billion kronor, in the fourth quarter, last year.
"Fiscal 2009 was probably the most challenging year that the entire aviation industry has experienced", said Mats Jansson, President and Chief Executive of SAS.
SAS claimed that the share issue of 5 billion kronor, worth $670 million, has the support of its three state stakeholders - Sweden, Denmark and Norway - as well as its largest backer in the private sector, the Wallenberg family.
A consortium of banks, comprising J. P. Morgan, Nordea, SEB Enskilda, DnB Markets, the Royal Bank of Scotland and Danske Markets, has confirmed that it expects to underwrite the remaining 42.4% of the shares to be issued in the rights offering.
The company explained that the credit lines are being re-worked as the banks have been agreeing upon lending on improved terms. Extension of bond maturities has also been considered.
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