SAS to ditch Spanair and airBaltic

Embattled carrier Scandinavian Airlines System (SAS) has unveiled plans to sell off subsidiaries Spanair and airBaltic in a bid to pull itself out of its financial woes..

SAS said it would sell a majority holding in its wholly-owned company Spanair to a group of Spanish investors for an undisclosed sum, but did not specify how large the stake would be.

It will also sell its 47.2 percent stake in airBaltic to the management of airBaltic for 220 million kronor ($28.6 million).

“The SAS Group has reached an initial agreement with a group of investors from Catalonia, lead by the Consorci de Turisme de Barcelona and Catalana d’Iniciatives, for their incorporation as new majority shareholders into SAS’ subsidiary Spanair S.A.,” it said in a statement.

SAS said it expected to sign a definitive agreement by the end of January.

The Scandinavian carrier plans to remain a core shareholder in Spanair and act as its industrial partner to implement Spanair’s current restructuring programme.

In addition to Spanair and airBaltic, SAS is currently made up of the airlines SAS Denmark, SAS Norway and SAS Sweden, as well as low-cost carriers Blue 1 and Wideroe, which together transported 33.42 million passengers in 2007.

It also owns 20 percent of British airline British Midland.

SAS has struggled for the past decade with financial woes, reporting substantial losses and coming close to bankruptcy after the September 11th, 2001 attacks on the United States, the war in Iraq and the outbreak of the SARS epidemic in 2003.

After a series of savings programmes, management succeeded in pulling the company out of the red in 2006 as the airline sector saw an upswing in business.

But 2007 was another bad year for SAS. After three strong quarters, the group ended the year in freefall, a direct result of the technical problems it experienced with its Dash-Q400 planes built by Bombardier which led it to ground many of its aircraft.

The rise in fuel prices this year and the global economic crisis made matters even worse.

In mid-August, in order to turn its situation around, it announced that it was stepping up its restructuring programme, leading to a 10 percent reduction of its fleet to some 300 aircraft and 2,500 job cuts.

Just days after that announcement, a Spanair plane crashed on August 20 at a Madrid airport, killing 154 people.

The cause of the crash, Spain’s deadliest air accident in 25 years, is not yet known for certain though media reports have suggested that the plane’s wing flaps failed to extend properly when it attempted to take off, causing it to lose altitude and crash.

In the third quarter, SAS announced a record net loss of almost 2.0 billion kronor ($260 million) compared to a profit of 701 million kronor in the same period a year earlier.

In its weakened state, the group has repeatedly been the subject of takeover rumours.

In September, analysts suggested a possible takeover by German carrier Lufthansa, its partner in Star Alliance.

On November 5th, SAS management said it was still considering the possibility of a merger or takeover. And two weeks later, Lufthansa confirmed it was still interested in SAS.

SAS is listed on the stock exchanges in Stockholm, Oslo and Copenhagen and had 21,898 employees at the end of 2007.

On Thursday on the Stockholm exchange, the SAS share closed up 3.59 percent at 37.50 kronor in an overall market up by 1.19 percent.


‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.