SAS bails out of airBaltic

  • 2008-08-15
  • By Mike Collier

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

At present the Latvian state holds a controlling52.6 percent of the shares and SAS holds 47.2 percent of the company, which was established in 1995.

The news brokein Stockholm on August 14th when SAS spokesman Mikael Lindberg wasasked by Reuters if SAS would sell its stake in airBaltic as the company revealed its half-yearly results. "Ican confirm that," came the brief but informativereply.

Almost as brief was thestatement issued by airBaltic CEO and chairman Bertold Flick inresponse: "The announcementof SAS to divest and sell its stake in airBaltic does notchange the current growth and development strategy of theairline." Flick has so far refused further comment.

But the imminentdeparture of such a major shareholder with extensive expertise and aviation resources cannot fail to have someeffect, and the question now turns to who will buy SAS's stake and atwhat price.
Transport minister Ainars Slesers' spokesmanGirts Dripe told the Baltic News Service that the SAS announcementwas not related with the government's decision not to privatizeairBaltic's shares as much as with differing opinions about thefuture 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 decidednot to privatize airBaltic. This means SAS cannot become the majorityshareholder and so the board of SAS decided to sell our share," she said.

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

SAS expressed regret that it had been forced into the decision butsaid "We got involved with airBaltic with the aim of becomingmajority owners, so in that sense we are regretful that we will haveto pull out."

SAS would not put a price on its stake in airBaltic and said thatno timeframe for the sale has yet been worked out. It added that itcould not comment on whether any potential buyers had already been intouch.

Profitsthroughout the aviation industry are being squeezed by high fuelprices and few, if any, airlines have ready cash available. There'salso the fact that anyone in acquisitive mood is currently spoiledfor choice.

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

However,local rival FlyLAL may be among the potential bidders. There's littlelove lost between the Lithuanian airline and airBaltic, but a seniorfigure within FlyLAL told The Baltic Times: "If these shares willbe on the table, we will estimate the situation," addingthat part of airBaltic's problem is that it is "wasting money onunreasonable things."