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SAS in talks over stake in Estonian airline

AFP/The Local · 8 Jan 2010, 07:34

Published: 08 Jan 2010 07:34 GMT+01:00

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"We would like to buy up SAS's share at the lowest price possible but we do not exclude the possibility that both Estonia and SAS will remain among the company's owners," economics ministry spokesman Kalev Vapper told reporters.

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.

Story continues below…

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.

AFP/The Local (news@thelocal.se)

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Your comments about this article

14:03 January 8, 2010 by Beavis
Since 2003 its been outrageously expensive to fly with this carrier.

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.
12:54 January 10, 2010 by Bensonradar
If SAS have been offloading subsidiaries like Spaniar to balance its books, it will be keen to sell its 49 per cent investment in Estonian Air.

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.
12:09 January 11, 2010 by Beavis
Perhaps the Estonian government has realised that it needs a carrier offering reasonable prices to bring in tourists, as currently its too expensive to make Talinn a tourist destination, except via ferry.By using the SAS pricing structure tourists avoid Estonia.
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