Monday, July 18, 2016

The Dream Of An International Hub In The Nordics Is Alive - The Scandinavian Governments Want To Sell SAS

Via Business Insider:

Last week Björn Kjos, CEO and founder of the airline Norwegian, criticized the Swedish government for not doing enough to establish Stockholm as an international hub connecting flights to and from Asia, Europe, and America.

According to Kjos, Stockholm is strategically positioned for such an international hub, but it would require renegotiations of an agreement with Russia that practically allows only SAS to fly over Russian air space.

Such a renegotition was not feasible, because of the federal interests in Scandinavian Airlines however. But now, the Scandinavian governments have opened up for a sale of SAS.

The reason is that the governments no longer view themselves as the best strategic proprietors of the airlines.

"The whole European airline industry is under a lot of pressure and the market is not saturated in terms of consolidation. SAS needs to work in the long term with its strategic choices and in view of that I don't think a federal ownership is the best", says Mikael Damberg, Sweden's Minister for Enterprise and Innovation, to SvD.

Monica Mæland, Norway's Minister of Trade and Industry, has similarly expressed Norway's intention to sell SAS. The Swedish parliament has already given the government mandate to sell SAS, writes Veckans Affärer. But it all depends on finding the right buyer.

According to Jan Ohlsson, editor-in-chief of Travel Insider, the ideal situation would be one in which SAS was acquired by Chinese airlines wanting to get a foothold in Europe, writes DN. That could pave the way to creating a Nordic hub for internatiuonal travel, even without the involvement of Norwegian.

A sale of SAS ought also to increase the Scandinavian government's interest in seeing the way of other airlines.

If and when SAS is sold depends on finding the right buyer. As Monica Mæland, Norway's Minister of Trade and Industry, tells Norsk Telegrambyrå, "We are in no hurry to sell SAS".

Another obstacle is that enormous future pension costs make SAS quite unattractive to potential buyers.

"It's not difficult to sell SAS. But then someone has to take the huge pension bill. It's a catastrophic cost that no one wants to take responsibility for. The pension costs probably have to be reddemed by the Nordic countries. It's crazy, but that's what I think need to happen for someone to buy SAS", Frode Steen, professor at Norwegian School of Economics and fligh expert, tells NTB.

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