Swedavia boosted by cash injection from Swedish government
Swedish airport operator, Swedavia, has received a SEK3.15 billion cash injection from the government to help it survive the COVID-19 crisis.
Swedavia says that the “contribution” from its shareholder, which amounts to around €300,000, will secure the “financial position” of the state owned company.
“We welcome our owner’s support in a very difficult situation. Society in general and the aviation industry in particular are in the midst of an unprecedented crisis,” notes Swedavia CEO, Jonas Abrahamsson.
“During the spring, Swedavia took forceful savings measures to counter the decline in traffic, but our operations are totally dependent on variable revenue from our customers, and as of two months ago, we have lost about 500 million kronor a month.
“This capital injection is thus crucial so that we can maintain our infrastructure and ensure Swedish access by air.”
In the short-term, Swedavia’s current assessment is that the aviation market in both 2020 and 2021 will be strongly affected. As a result, it admits that the company will continue to adapt all of its operations to lower traffic volumes and a new market situation.
Among other measures, this includes continuing to review costs and develop operational excellence. It also means Swedavia will cut 800 full-time jobs, a move it announced in late March.
Such drastic measure are necessary as during the spring, commercial air travel came to an almost complete standstill as a result of the coronavirus pandemic. Since COVID-19 struck, Swedavia has lost 98% of its traffic and around 500 million kronor in revenue a month.
“The Swedish economy, and by extension the country’s prosperity, depend on access all across Sweden and on good relations with the rest of the world,” states Abrahamsson.
“With the country restarting, air travel and our airports will play a critical role in growth, but also in enabling people to meet again.”
In light of the new market conditions, in late March this year Swedavia announced a review of all investments in order to prioritise projects and measures that increase efficiency, flexibility and service over capacity.
Two projects at Stockholm Arlanda that were intended to add new capacity through a new pier and improved baggage handling have therefore been paused for the time being.
Abrahamsson says: “As for the development of the aviation market in the slightly longer term, there are great uncertainties. We are now analysing what a new normal situation in the market could look like.
“Although we do not foresee any need for either new terminal or runway capacity over the next few years, it is important to maintain both flexibility and preparedness in order to continue developing our airports in the longer term.”
The decision on a shareholder contribution requires the approval of the Swedish parliament and the EU Commission.