SAS bails out of airBaltic

Aug 15, 2008
By Mike Collier

RIGA - Frustrated by the Latvian government's refusal to privatize airBaltic, pan-Scandinavian airline SAS has finally lost patience and decided to sell its own stake in the Latvian national carrier.

At present the Latvian state holds a controlling 52.6 percent of the shares and SAS holds 47.2 percent of the company, which was established in 1995.

The news broke in Stockholm on August 14th when SAS spokesman Mikael Lindberg was asked by Reuters if SAS would sell its stake in airBaltic as the company revealed its half-yearly results. "I can confirm that," came the brief but informative reply.

Almost as brief was the statement issued by airBaltic CEO and chairman Bertold Flick in response: "The announcement of SAS to divest and sell its stake in airBaltic does not change the current growth and development strategy of the airline.“ Flick has so far refused further comment.

But the imminent departure of such a major shareholder with extensive expertise and aviation resources cannot fail to have some effect, and the question now turns to who will buy SAS's stake and at what price.
 
Transport minister Ainars Slesers' spokesman Girts Dripe told the Baltic News Service that the SAS announcement was not related with the government's decision not to privatize airBaltic's shares as much as with differing opinions about the future development of the company.

However, when The Baltic Times contacted SAS in Stockholm, spokeswoman Elisabeth Manzi told us that Slesers position was incorrect and that the reason for the sale was clear: “The Latvian state has decided not to privatize airBaltic. This means SAS cannot become the majority shareholder and so the board of SAS decided to sell our share," she said.

“There have been ongoing discussions for a while and the Latvian transport minister will meet with SAS next week."

SAS expressed regret that it had been forced into the decision but said “We got involved with airBaltic with the aim of becoming majority owners, so in that sense we are regretful that we will have to pull out.”

SAS would not put a price on its stake in airBaltic and said that no timeframe for the sale has yet been worked out. It added that it could not comment on whether any potential buyers had already been in touch.

Profits throughout the aviation industry are being squeezed by high fuel prices and few, if any, airlines have ready cash available. There's also the fact that anyone in acquisitive mood is currently spoiled for choice.

Italian national carrier Alitalia still has a for sale sign hangiing around its neck after takeover deal with Air France/KLM went sour, British Airways and the Spanish carrier Iberia are negotiating a partnership that also includes American Airlines and meanwhile even low cost carriers such as Ryanair are struggling to make a profit.

However, local rival FlyLAL may be among the potential bidders. There's little love lost between the Lithuanian airline and airBaltic, but a senior figure within FlyLAL told The Baltic Times: “If these shares will be on the table, we will estimate the situation,” adding that part of airBaltic's problem is that it is “wasting money on unreasonable things.”




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