Scandinavian Airlines (SAS) will be raising needed cash by selling off its short-haul, Norwegian-based airline Widerøe, but won’t be cutting its ownership ties to the carrier just yet. SAS doesn’t intend to shed its stake in Widerøe completely until 2016.
SAS reported just before the weekend that it had struck a deal to sell 80 percent of Widerøe to an investor group called WF Holding, consisting of the ferry line Fjord1, Torghatten Trafikkselskap and Nordland County. The trio is investing NOK 500 million (USD 86 million) in WF Holding and SAS will retain a 20 percent stake in the airline that’s recently been reporting strong profits.
Newspaper Dagens Næringsliv (DN) reported on Monday, however, that SAS will also invest new capital in Widerøe but wouldn’t disclose how much. Nor would the head of Torghatten, Brynjar Forbergskog, or Leif Øverland, head of Fjord1, comment on the transaction.
SAS finance director, Göran Jansson, confirmed that the airline will invest “a small amount” in Widerøe but declined to specify how much. SAS itself claimed it would eventually get SEK 2 billion for Widerøe, but that’s after it sells out completely, sells 10 of its own Dash aircraft to Widerøe and after Widerøe’s ongoing operations contribute profits to the deal.
Forbergskog, said to have engineered the deal with SAS, was involved in the launch of SAS’ arch-rival low-cost carrier Norwegian Air 10 years ago and has served as chairman of Norwegian. Asked how it felt to now be working with SAS, Forbergskog said he was “satisfied that Norwegian was doing so well. Now we’re involved in Widerøe and pay attention to that.”
Pilots pleased
Widerøe’s own pilots had said they wanted to buy the airline and the company’s nearly 1,400 employees will now be invited to buy shares in their new owner WF Holding. Aleksander Wasland, a Widerøe pilot who represents his colleagues, told DN that he was relieved by SAS’ sale to WF Holding.
“We regard the new owners as serious players in the travel industry and Nordland County (which is putting up NOK 75 million of the NOK 500 million WF Holding is paying) is an important catalyst for making sure we get business out in the districts,” Wasland told DN. The shares offered to employees will come from Nordland County, which intends to eventually reduce its stake in the venture.
Others weren’t so glad that the county government was investing taxpayers’ money in airline stock, noting how government-owned airlines haven’t done well in an era of deregulation and heavy pension obligations. “I don’t quite understand what Nordland County is doing there as an owner in an airline,” Kenneth Sivertsen, an airline analyst at Arctic Securities, told newspaper Aftenposten. “They could have used taxpayers’ money for something else.”
The sale of Widerøe isn’t enough to secure SAS’ future, Trade Minister Trond Giske cautioned, but he thinks it’s a step in the right direction. “The sale is very good for SAS, which needs money, and for Widerøe, which will get new owners who know Northern Norway where Widerøe has important routes,” Giske said, adding that the deal was also good for Widerøe’s passengers.
Norway’s state pension fund Folketrygdfondet, meanwhile, has emerged as one of major buyers of Finnair’s former stake in Norwegian Air. Other investors include funds run by insurance company Storebrand and Norway’s biggest bank, DNB. One Storebrand funds manager told DN that Norwegian, which is profitable and expanding, was doing well “competing against a struggling SAS. Norwegian is launching new intercontinental routes, considering a takeover of LOT Polish Airlines and experiencing big jumps in its share price, which some analysts think can reach NOK 350. It’s currently trading at around NOK 275 and the state pension fund is now Norwegian’s second-biggest shareholder with a stake of around 7 percent.
Views and News from Norway/Nina Berglund
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