The Scandinavian airline group SAS has signed an agreement with Maersk Air
of Denmark to acquire 49 percent of the shares in the Tallinn-based airline
"About five months ago we decided to look for a buyer of our stake in
Estonian Air because of two reasons. First, the overall crisis in the
airline industry. Second, we wanted to focus on our primary market in
Denmark. Estonian Air did not have essential synergy with Maersk outside
Denmark. The price offered by SAS was attractive," said Maersk Air
President Flemming Ipsen at a Sept. 12 press conference.
The total purchase price decided upon was 180 million Swedish kronor (20
million euros), a spokesperson for SAS said.
Jorgen Lindegaard, chief executive officer of SAS, explained that his
company considered the acquisition of shares a strategic decision.
"We have always wanted to work with Estonia because the Baltic market is
important for us and we usually work at local markets through local
airlines. The decision to acquire the shares matured about one month ago,"
SAS also signed an agreement with the Estonian investment-banking firm
Cresco, the owner of 17 percent of shares in Estonian Air, covering a
possible increase of SAS shareholding in the Estonian airline. The remaining
34 percent of the shares in Estonian Air is held by the Estonian state.
"The state capital share has been decreasing in the airline business in the
last decades and pressed out by private capital. Estonian Air has
extensively developed since its privatization in 1996. The government
decided yesterday [Sept.11] not to use its right of privileged buy because
Estonian Air does not need financial support from the state," said Estonian
Minister of Economic Affairs and Communications Meelis Atonen.
Estonian Air will continue to operate as an independent airline under its
"We do not plan to change the management of Estonian Air. We will run
Estonian Air as an independent company with its own aircraft fleet and
marketing strategy, however we will cooperate within the SAS Group should it
be beneficial," said Lindegaard.
"The majority of the airline traffic from Estonia will still be operated by
Estonian Air. New routes will be opened with a particular focus on new
direct routes," he added.
The acquisition is part of the SAS strategy to strengthen its position in
the Baltic region, the news release by SAS said.
SAS has a shareholding in the Latvian airline airBaltic and it is the owner
of the Finnish airline Botnia.
"Estonian Air is a profitable, strong and growing company in a strategically
highly attractive region. Traffic to and from Estonia is expected to
increase by at least 8 percent to 10 percent annually," said Gunnar Reitan,
executive vice president of the SAS division responsible for subsidiary and
The acquisition is expected to have a neutral effect on the SAS Group's
earnings during 2003 and a positive effect in 2004, according to the
Estonian Air was founded in 1991 and was privatized in 1996, with Maersk Air
acquiring 49 percent of the shares at the time. The airline currently serves
routes between Tallinn and Copenhagen, Stockholm, Oslo, Moscow, Kiev,
Vilnius, Frankfurt, Hamburg, Berlin, London and Paris. The major part of
traffic is to Stockholm and Copenhagen.
Estonian Air has 311 employees, and during the past two years the company
has reported a net profit of 14 million kroons (900,000 euros) in 2001 and
39 million kroons in 2002.
In addition to Estonain Air, SAS acquired 100 percent of the shares of
Maersk Air Maintenance Estonia, a Tallinn-based company providing technical
servicing of aircraft.