State credit guarantees to airlines and expanded credit guarantee framework for the Swedish Export Credit Agency to mitigate the effects of SARS-CoV-2
The Government proposes that airlines be able to receive credit guarantees in 2020 amounting to a maximum of SEK 5 billion, of which SEK 1.5 billion is intended for SAS. It will also be proposed that the Swedish Export Credit Agency’s credit guarantee framework be expanded to support Swedish export companies and, by extension, the shipping industry. The proposal is based on an agreement between the Government, the Centre Party and the Liberal Party.
The ongoing spread of SARS-CoV-2 is hitting the transport industry hard, in particular the aviation industry. The demand for flights has essentially disappeared within a very short space of time. Many airlines are in an acute financial situation and are having difficulties securing loans on the capital market.
Aviation is currently very important for maintaining functioning transportation throughout the country. It is important for Swedish businesses – but also from the perspective of crisis preparedness and total defence – and for several different types of essential transport, such as medical transport, air rescue services and aerial firefighting services.
To make it easier for airlines to secure loans on the capital market, the State must be able to guarantee loans secured from commercial banks during the period that airlines are affected by the spread of SARS-CoV-2. The Government therefore proposed today that the Riksdag decide that credit guarantees can be provided. The Government has also decided to instruct the Swedish National Debt Office to take preparatory measures and, when the Riksdag has taken a decision and the European Commission approved the support, to begin the work of providing credit guarantees.
The purpose of this proposal is to protect essentially viable Swedish airlines from being put out of business as a result of the prevailing situation.
The ongoing crisis is also having an impact on critical infrastructure more broadly. Similar credit guarantees for the shipping industry can be managed through the Swedish Export Credit Agency. To enable the Agency to without delay, perform its task of promoting Swedish exports and, by extension, the Swedish shipping industry, it will also be proposed that the Swedish Export Credit Agency’s credit guarantee framework be expanded by SEK 50 billion.
The situation is changing rapidly and preparedness to act swiftly is high should more measures be needed.
The Swedish National Debt Office has been tasked with preparing to provide credit guarantees in 2020. These credit guarantees may amount to a maximum of SEK 5 billion for loans to airlines that on 1 January 2020 were in possession of a Swedish permit to operate commercial aviation activities and that have their main operations or their headquarters in Sweden. SEK 1.5 billion of the total SEK 5 billion are intended for SAS.
SAS plays an important role in meeting society’s basic need for aviation infrastructure in both Sweden and Denmark. The Swedish and Danish governments have therefore agreed that the Danish Government will present a similar measure for SAS. The two governments have not ruled out the need for additional measures in the future.
Credit guarantees may be provided to around 20 airlines that have a Swedish permit to operate commercial aviation activities and have their main operations or headquarters in Sweden. Of these, a handful currently operate regular scheduled traffic. The others operate air ambulances or helicopter services, for example.
A guarantee fee will be charged to finance the risk for central government and administrative costs.
These credits guarantees should be provided as soon as possible; this is why the Government prepared the proposal yesterday for prompt consideration by the Riksdag.
Press Secretary to the Minister for Finance Magdalena Andersson
Phone (switchboard) +46 8 405 10 00
Mobile +46 73 074 05 57
email to Mirjam Kontio