SAS Sells Remaining Stake in BMI to Lufthansa - DealBook Blog - NYTimes.com
SAS Sells Remaining Stake in BMI to Lufthansa
October 1, 2009, 7:10 am
SAS, the Swedish airline, said Thursday that it had sold its 20 percent stake in
British Midland, or BMI, to
Lufthansa and an affiliate for 38 million pounds ($61 million) up front, while additional payments may follow.
The German airline can now decide alone what it will do with the struggling British carrier, while SAS said it wanted to concentrate on what it considers its home markets in the Nordic region.
“These are the markets we know best, and where we have the best position,” Vice President Sture Stølen of SAS said in an interview.
“It doesn’t make sense for us to hold minority stakes in airlines all over Europe,” he said, adding that “we have stakes in Spanair and Air Baltic, and we plan to exit those, too.”
Lufthansa’s affiliate will pay 19 million pounds for shares that SAS holds in BMI, the second-largest carrier at Heathrow after British Airways, and the German airline will pay an additional 19 million pounds for other rights held by SAS.
The Swedish airline could also receive more over the next two years, depending on BMI’s profitability.
SAS first bought into BMI in 1989, and will continue to collaborate with it through the Star Alliance, a group of international airlines.
LHBD Holding, a British company one-third owned by Lufthansa, has held 80 percent of BMI shares since the start of July, and will receive the remaining 20 percent once the transaction is completed. The deal will be wrapped up November 1, Lufthansa said.
Mr. Stølen said the move “gives Lufthansa much more freedom to do whatever they want to do.”
Aage Duenhaupt, a Lufthansa spokesman based in London, said the company was still defining its strategy.
“We’re working to stabilize BMI and put it back in the black,” he said. “The options go from a total integration to a total sale.”
Buying all of BMI allows Lufthansa to decide whether to sell it, without having to negotiate at length with other shareholders.
“We have to make a decision fast,” Mr. Duenhaupt said, adding that “It’s a crisis situation in the industry.”
Mr. Duenhaupt would not comment on which company BMI might be sold to, but
British Airways has expressed interest in its smaller rival in recent days.
The global recession has hit the airline industry hard, and SAS is no exception. In August, it reported a loss of $150 million for the first half of the year, and is continuing to reduce capacity and cut jobs. Before taxes and one-off restructuring costs, the loss amounts to $122 million.
Mr. Stølen said that out of the 21 aircraft the company planned to take offline, 14 were already gone, another four or five would be pulled out this month, and the rest in early 2010. Of the 3,000 layoffs initially planned, 1,227 have been carried out so far.
SAS shares rose as high as 5.10 Swedish kronor in morning trading in Stockholm, before falling back to 4.96 kronor, just 0.20 percent above where they opened.
Lufthansa shares were down 0.99 percent to 11.99 euros in midday trading.
So where the hell does this leave us then
