Lets buy an Airline

[Flap Sup]

Hi there

Saw the frontpage of a scandinavian newspaper today. It stated that the new CEO of SAS were ready to buy more airlines in the Baltic area, naming LO and AY as potential targets (at least that was what I understood with my limited Norwegian/swedish). Think the paper was 'Dagans Nyheter'.

Any comment on that? Are AY and LO stateowned or private these days?

IMHO both airlines would fit into the SAS network and fleet, as both airlines more or less operate same equipment as SAS. LO 733/4/5 (haven't they ordered NGs?) and 76 fits well with SAS. The EM and ATR are new to SK though. As SK already focus on Eastern Europe, the network would benefit from this. However, LO is currently with OneWorld.

Through the years, AY and SK have operated the same types of DC/MDs (more or less). Now AY expand with A320 - the same as SK. MD11 (ready for replacement) and 757 are new to SK. But apparently AY can operate A321 and 757 alongside. Anyone knows if the 757 only operate charter, and if so, is it a company for itself?

As with LO, AY could strengthen the SK network east, but alas, AY is also with OneWorld.

If the BU deal goes through, SAS just aquired a cheap and apparantly good airline. Do SAS have the money to buy more competitors right away?

To sum up, things will get interesting in Scandiland the next years.

FS

[This message has been edited by Flap Sup (edited 30 May 2001).]

[This message has been edited by Flap Sup (edited 30 May 2001).]

[Nite_Flite]

:) :) :) :)
My oh my...you sure have been reading your home work...give SAS another 10 years and they will be a exclusive airbus customer...ups, almost forgot...and Bombardier customer...cause if it was my company I would probably have sold them by now. Fired management in commuter and transfered pilots, F/A's and mechanics to mainline SAS..

[Flap Sup]

N_F
Didn't mean only to compare equipment compatability. However, from afar, this was the easiest way for me to compare companies. I don't know 'bout working environment in SK vs LO or AY, neither salaryconditions or general compatability within these nationalities.
What I did have in mind with my post, was to start a debate about:
- Can SK create a monopoly situation in the Baltic area
- Do they have the cash to do it
- Will crew accept that management outsource some flts to eg. AY, should they operate cheaper
- Why not buy a stake in TE now that they are working the Baltic Area
- Will Big Brother LH take a stake in this, as with the recent BM deal and the older JK

I know these are questions that cannot be answered with a yes or no. But as we are in a discussionforum, mabye I could hear some opinions.

N_F, what are you saying? Is SK management or crew displeased with Airbus?? They have just been aquired, how long have they been in service?
I know of the Q400 problems. But then again, I have also heard that they perform very well (when they perform that is!!).
Rgds FS

[This message has been edited by Flap Sup (edited 30 May 2001).]

[Flap Sup]

Or was the CEO just giving the usual "There is a new sherif in town"-speach?
FS

[JJflyer]

AY... why should they sell out to SAS ? I cannot think one reason. Regarding MD11´s I hear that Finnair is going to hold to those for a while still.

JJ

[Flap Sup]

To answer my own question:
LOT is owned by the Polish Government (62,4%) and SAirGroup (37,6%), but is currently in a process to sell the remaining of the Gov shares.
Finnair is owned by the Finnish Government (58,43%). The rest is owned by private shareholders (mainly finns) and government pensionfunds.


JJ: Indeed, why would they?? How can an SAS CEO talk 'bout buying a company, that the government haven't put out for sale?
Unless SK was able to convince AY that they weren't able to survive in the area, with their relative small operation. If SK was able to convince them "together we'll be stronger". Is AY big enough to survive in Scandinavia? Some years back, they tried operating a lot of int flts out of Stockholm. Did they succeed?
And regarding the MD11s: I just assumed that they were ready for replacement, as they were the very first MD11s to fly some 12 years back. Apparantly FX buys almost all used MD11s for freighterconversion, so I just guessed...
Furthermore, the MD11s initially struggeled to meet its original performance targets, forcing MDC to introduce structural changes. Did those changes also apply for AC already built?

FS


[This message has been edited by Flap Sup (edited 30 May 2001).]

[JJflyer]

As far as I know flights out of ARN where profitable to the point where it got SAS really worried and forced them to slash prices on certain sectors.

Remember that Finnair like Braathens is a true national airline and flies the flag where SAS is not and does not.

Regarding the MD11´s. Finnair airplanes have a lot of life left in them and will be used for a while. That is not to say if FedEx comes up and makes an offer that cannot be refused, Anything is for sale if the price is right.
What would be the replacement? Probably a scarebus widebody product such as A330 or A340. Most likely it will not be a B767 type airplane. I still remember times when flying onbord with AY from BKK to HEL and most of SAS freight and luggage was onboard as the B767 could not have made trip to Copenhagen or ARN ( Which ever ) with full load.

I am sure that there is room in Nordic for 2 major carriers. From a customer viewpoint a healthy competition keeps fares lower and service better.

JJ

[Flap Sup]

JJ
I agree. There should be room for two carriers in scandiland. However, the two present players are no longer equal in proporsion, SAS has outgrown Finnair (they were way bigger, even before the Braatens buy - I know, I know, not finalized yet). But while SAS keep on growing, will AY be able to keep up the pace?
Longhaul? How can SAS make money on the 767, operating it on those sectors? I don't get it. Balkan is the only other operator who used 767 on such long routes, and look what happened to them! N_F, I could understand you don't like the Airbus, but at least you will get an AC that can operate the flight sectors it is supposed to do.

But back to the original question: New SAS aquisitions. Are there other potential targets than AY, LO or TE?
Could SK themselves be the target for a buyout? If a larger carrier (SAgroup, LH, BA) needed a stronger stand in Northern Europe, SK would fit the profile. Possible?

FS

[TripleTAY]

Well I never ever think that SAS could be put up for sale. I think they will continue to grow for the years to come. SAS has been either been buying up or buying stakes in companys within Scandinavia the last couple of years and I think they will continue their campain in order to maintain their near monopol within the region.

[Nick Figaretto]

Her er artikkelen som stod i Dagens Næringsliv 29.05.01. Den er svært interessant, både for de som måtte være interessert i oppkjøpet av Braathens og et eventuelt oppkjøp av Finnair og LOT.

"SAS vurderer Finnair-kjøp
Kirsten Tuv, Dagens Næringsliv (01:00 29.05.2001)

Kjøp av Finnair, det polske flyselskapet LOT og flere baltiske flyselskaper vurderes i den nye SAS-strategien. Medkjøp og allianser er alternativer til kjøp. LOT er den mest sannsynlige oppkjøpskandidaten.


SAS er klar til å kjøpe det polske flyselskapet LOT hvis Swissair selger seg ut. Det bekrefter den nye SAS-sjefen, Jørgen Lindegaard. SAS rendyrker sin strategi, og setter nå alle krefter inn på å komme på samme nivå som Lufthansa og British Airways i østersjøområdet.

Både polske LOT (Polskie Linie Lotnicze) og Finnair må se opp når den nye SAS-sjefen definerer sitt nye hjemmeområde - østersjøområdet. Den nye SAS-sjefen, Jørgen Lindegaard (52), følger samme strategi som da han var sjef for det danske telefonverket: Ekspansjon i nærområdene i stedet for å kjøpe seg inn med ulike prosentandeler i selskaper rundt omkring i Europa.

Nærområdene er Skandinavia, Finland, St. Petersburg-området, Baltikum, nordlige Polen og nordlige Tyskland.

Vil kjøpe i LOT
Indirekte bekrefter Lindegaard at han vil kjøpe LOT hvis Swissair vil selge sin andel i selskapet, og han ønsker et større samarbeid med Finnair i Polen.

- Vi vil gjerne ha et større samarbeid i Finland, i de baltiske landene, og i det nordlige Polen med LOT. Om det blir i form av oppkjøp, medkjøp, samarbeidspartnere eller allianse har vi ikke klart for oss. Men det er vår strategi å ekspandere, og dette er vårt hjemmemarked. Men vi vil aldri drømme om å gå ut og gjøre noe som de vi skal samarbeide med ikke ønsker, sier Lindegaard.

-Vil SAS kjøpe LOT?

- Jeg har tenkt på mange ting, men jeg har lært at man ikke skal uttale seg om sine tanker før de er konkrete. Men du la vel også merke til at jeg sa at nordlige Polen er et naturlig markedsområde for oss, svarer Lindegaard.

Etter det DN forstår, angrer SAS på at selskapet ikke kjøpte LOT for to år siden da selskapet var til salgs. Den gang prioriterte de annerledes. Nå passer LOT inn i strategien, ettersom LOT og SAS kan dele Polen mellom seg. Kjøp av LOT er derfor nå mest aktuelt, etter det DN erfarer.

Gammel strategi
Finnair opplever at SAS spiser seg sakte, men sikkert inn på Finnairs hjemmemarked. Finnair opplever nå at SAS sammen med Lufthansa og Air Botnia i løpet av to år har økt sin andel av flyginger ut fra Finland fra 23 prosent til 27 prosent. I samme tidsrom har Finnairs flyginger utenlands fra Stockholm stått fast på 14 prosent.

- Det er mye mer naturlig måte å vokse på enn å knoppskyte forskjellige steder. Dette er samme strategi som Karl 12. fulgte i sin tid. Forskjellen på meg og Karl 12. er at jeg er en mye vennligere mann enn ham, sier Lindegaard.

Det Lindegaard definerer som sitt nærområde, er et marked med 100 millioner mennesker. I dag frakter SAS 22 millioner passasjerer. Når Lindegaard sitt mål, vil SAS fly 35 millioner mennesker i løpet av fire år. SAS kan da sammenligne seg med dagens Lufthansa og British Airways (BA).

Passasjertilgangen ved oppkjøp av andre selskaper, som for eksempel Braathens' syv millioner passasjerer, kommer i tillegg.

For å klare målet, må SAS vokse to prosent årlig i tillegg til forventet passasjervekst. Det innebærer en vekst på mellom syv og ni prosent årlig.

- Vi vil bygge opp et sterkt selskap som naturlig kan sammenligne seg med BA og Lufthansa ved å ekspandere rundt om i Europa på samme måte som telefonselskapene da de skulle ut og ekspandere, sier Lindegaard.

En bråte med ro
Lindegaard inntar en rolig holdning til bråket rundt forslaget om å kjøpe Braathens, og sier han forstår også at Konkurransetilsynet har sitt arbeid å utføre.

Likevel er han helt klar i sin konklusjon. Får ikke SAS kjøpe Braathens på grunn av konkurransen, går selskapet konkurs.

- Jeg forstår godt at Konkurransetilsynet er bekymret og vil diskutere en rekke krav og ønsker med oss og med andre. Sier Konkurransetilsynet nei, kjører vi videre som før, og da går Braathens konkurs. Da samler vi opp passasjerene etterpå. Hvis tilsynet synes at det er en bedre løsning, er det opp til dem, sier Lindegaard.

Han har merket seg Konkurransetilsynets uttalelser om at det vil prøve å finne en annen kjøper.

- Det er helt fint hvis tilsynet kan det. Men jeg vet ikke om Konkurransetilsynet kan pålegge selgeren å selge til lavere pris. Sier selgeren nei, er vi tilbake til start, sier Lindegaard.

PS! Karl 12. forsøkte å erobre Norge i 1718, men falt under beleiringen av Fredriksten samme år."

Nick.

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"I have found that alcohol taken in sufficient quantity produces all the effects of drunkenness."
~ Oscar Wilde

[JJflyer]

I am waiting with great interest what happens.


JJ

[Flap Sup]

Apparantly LOT is for sale. SAGroup is in financial trouble (due SN, AOM and Air Liberte, among others), and need to sell off some of their activities.
SK has announced themselves as potential buyers, but other players may show up, I would guess AF, BAW and DLH as SKs primary opponents. Although KLM probably would benefit from buying LOT, they haven't recovered enough to invest so much money in new airlines. Furthermore, KLM is probably tired of fighting SAS for the time beeing. Interesting times ahead for LOT/SK.

I have found no signs of AY beeing put out for sale.

rgds FS

[JJflyer]

Everything is for sale, provided the money is right... Even my sister :)

JJ

[Flap Sup]

Oh, yes, JJ. Everything is indeed for sale. What do you for your sister?
FS

[JJflyer]

Considering the present inter-family relationship ( Don´t know her what sister I don´t have a sister ) I should actually pay you to take her away somewhere like Wej or Karballah. You could trade her for 1000 Camels.
:) :) :)
JJ

[Nick Figaretto]

An other interesting apect in the SAS/LOT deal, is that LOT is currently limiting SAS' expansion in Poland. The polish government has passed a law whick states that foreign operators are limited to 55% of the traffic in and out of Poland. I.e.: LOT is granted at least 45% of the traffic.

I think this is per destination, but I'm not sure of that.

Anyway this is supposedly the main reason why SAS buys a few of the 56 seat Q460s. (Q400s with fewer seats in it.) These aircraft are to be operated by SAS Commuter.

SAS' expansion in Poland is mainly to feed the routes out of CPH. -And I imagine it's an important part of the "50% in 2005" strategy.

Poland is a growing market, and SAS wants to play an active role when the travelling habits of the Polish public are being developed.

In this context - buying LOT seems like a very good idea.

Nick.


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"I have found that alcohol taken in sufficient quantity produces all the effects of drunkenness."
~ Oscar Wilde