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SAS Faces EU Subsidy Complaint From Low-Fare Airlines Group

SAS Group, the biggest Nordic airline, faces a subsidy complaint from low-cost rivals asking the European Commission to investigate possible government aid.

The European Low Fares Airline Association, whose members include Ryanair Holdings Plc and EasyJet Plc, said SAS’s credit line of 3.5 billion Swedish krona ($550 million) is illegal state aid because it’s “effectively” guaranteed by the Swedish, Danish and Norwegian governments that own stakes in the carrier.

“The credit concerned is being deployed to support an ambitious program of fleet renewal and expansion of the SAS network, significantly distorting competition with SAS’s competitors which have no recourse to such state support,” John Hanlon, ELFAA secretary general, said in an e-mailed statement today.

Europe’s sovereign debt crisis is weighing on carriers from the Balkans to the Baltic as austerity programs coincide with high fuel prices and a European Union clampdown on aid. SAS, which has suffered annual net losses since 2007, last year announced cost cuts to help it become profitable and increased its credit line, extending it until March 2015.

Elisabeth Manzi, a spokeswoman for Stockholm-based SAS, declined to comment because any subsidy complaint would be addressed to the governments involved in the alleged aid. The commission declined to immediately comment.

EU regulators must approve large state payments to companies to check if they give a firm an unfair advantage over rivals. ELFAA previously challenged SAS’s 2009 share sale.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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