The Swedish government will not inject new capital into SAS, its industry minister said today, dealing a blow to the loss-making airline's restructuring efforts and sending its shares down 14% to all-time lows.

SAS said last week a restructuring plan announced in Feburary depended on it raising 9.5 billion Swedish crowns ($968m) in cash and converting 20 billion crowns of debt to equity.

It warned of liquidity problems if it fell short.

But no shareholders, including main owners Sweden and Denmark with 21.8% stakes each in the carrier, have committed to the plan.

"We want to be clear that we will not inject new capital into SAS in the future," Sweden's Karl-Petter Thorwaldsson told a news conference.

The minister said he would, however, propose to parliament that SAS be allowed to convert debt it owes to the government into equity capital.

Long-term, the government still wants to exit SAS altogether, he added, reiterating a years-long stance.

The airline said in a statement that Sweden's decision to support the debt conversion was an important step for a transformation to succeed.

Sweden has over recent decades injected 8.2 billion crowns ($834m) into the airline, including via loans to rescue the company from collapse during the Covid-19 pandemic when global air travel drew to a near halt.

The carrier was struggling already before the pandemic in the face of growing competition from low-cost carriers such as Ryanair and Norwegian Air, and has sought deals with labour unions on cost cuts.

"The Swedish decision puts serious pressure on creditors and employees to enter into agreements," Sydbank analyst Jacob Pedersen said in a note to clients.

"If the company can't attract capital, because Sweden and possibly Denmark won't invest more money, this risks being a step on the way to the grave," said Pedersen, who holds a sell rating on the stock which has dropped 67% year-to-date.

The Danish government has said before it sees itself as a long-term owner in the group.

CEO Anko van der Werff said last week that to attract new investors, SAS must slash costs for leased planes that stand unused due to the closed Russian airspace and slow recovery in Asia.

SAS is not alone in fighting to get back on its feet after the pandemic. Another carrier seeking shareholder backing is Air France-KLM which in May launched a €2.3 billion share sale.