March 22, 2010
SAS in talks over stake in Estonian airline
Published: 8 Jan 10 07:34 CET
Online: http://www.thelocal.se/24262/20100108/
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Representatives from Nordic airline SAS will meet with Estonian government officials next week who have called for talks to discuss a state takeover of SAS's holding in Estonian Air.
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SAS, or Scandinavian Airlines System, currently holds a 49-percent stake in Estonian Air. The Estonian state owns 34 percent and the remaining 17 percent belongs to Estonian investment company Cresco.
The Estonian daily Postimees said on Thursday that SAS was asking 200 million Estonian kroons ($18.3 million) for its stake.
Last month, the government asked Economy Minister Juhan Parts to beginning talks with SAS.
At the time, Part said that if the state acquired a majority holding, it did not plan to remain the main owner in the long term and would seek a new strategic investor.
As recently as November 2008, SAS had said it was considering buying the Estonian government's holding, reportedly because of concerns about Estonian Air's financial woes and belief that it needed a capital injection which the government was unwilling to provide.
Estonian Air has gradually recovered this year but SAS has been refocusing on its Nordic operations in a drive to stem its own financial problems, offloading subsidiaries such as Spain's Spanair.
Estonian Air was created as a state-owned carrier in 1991, the year the Baltic nation of 1.3 million people won independence from the crumbling Soviet Union.
In 1996, the government decided to privatise it, launching a tender for a 66-percent stake which was won by Danish aviation company Maersk Air working with Cresco. Maersk Air sold its 49-percent share to SAS in 2003.
Estonian Air is a minnow in the airline market, with a fleet of six planes.
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They need to dump SAS and look at a proper pricing stucture for their customers.
People just wont fly to Estonia from Europe for 300-400 euro a go. Take a look at how cheap the ferry companies can offer the trips for.
All airlines are trying to earn a profit in difficult economic circumstances. However, this move sounds political. Why would the Estonian government want to shoulder a majority holding of of its own carrier? Is the air travel market in Estonia picking up?
I feel the initiative has come from SAS keen to rationalise its operations on core business routes.