SAS called on investors to pour SEK5 billion Swedish kronor (USD$672 million) into the airline as it deepens a cost-cutting drive after posting a worse-than-expected quarterly loss.
SAS, which has been hit hard by the debilitating crisis in the aviation industry, said the rights issue was needed to allow it to trim its cost base further as it battles to become profitable.
The airline, half-owned by the governments of Denmark, Norway and Sweden, said it would pare an additional SEK2 billion from costs, on top of more than SEK5 billion in cuts already promised under its "Core SAS" program.
Analysts took a dim view of the report.
"The fourth quarter is very, very disappointing from my view," said Jacob Pedersen, analyst at Sydbank. "Of course, they have to enhance their efficiency programs and make some additional cost savings in Core SAS, and that also costs some money and that all brings us to the rights issue".
The airline said the rights issue was supported by its largest shareholders and a consortium of underwriting banks.
PAINFUL YEAR
Last year was the worst ever in terms of airline industry demand, according to the International Air Transport Association (IATA).
IATA believes the bottom has passed, but 2010 offers enormous challenges after an economic downturn that forced companies and individuals to slash travel budgets.
But SAS was already struggling before the financial crisis, with higher staff costs than many rivals. Efforts to streamline its business have come up against opposition from unions.
Weak demand and falling passenger numbers in the fourth quarter led to a pretax loss of SEK1.52 billion.
It also reported a 5.1 percent fall in traffic for January, but said it saw signs of more stable demand ahead.
In January, IATA predicted airlines would lose USD$5.6 billion this year following an estimated USD$11 billion in losses in 2009.
Signs from the airlines so far have been mixed.
Last week, British Airways posted a surprise third-quarter operating profit, helped by cost-cutting.
But Lufthansa has sought to lower expectations for 2010 and Finnair forecast first-quarter losses after a weak fourth quarter.
