UPDATED: The Norwegian government sold off its remaining 9.88 percent stake in Scandinavian Airlines (SAS) during an auction process Wednesday morning. Torbjørn Røe Isaksen, the government minister in charge of business and trade, said the decisision to sell was based on “major changes” in an airline industry that’s now based on business and market forces instead of state control.
“We see an airline industry that still must go through great changes,” Isaksen, from the Conservative Party, said at a press briefing Wednesday morning. “Now we could get a good price and therefore we sold the shares.”
The state’s nearly 38 million shares stem from 1946, when SAS was jointly founded and owned by the governments of Norway, Sweden and Denmark as a cooperation among their post-war national carriers at the time. Private investors also held stakes, have steadily taken larger stakes and the government of Sweden already has sold off its holdings.
While Denmark has retained its stake, not least because of its control of SAS’ major hub at Copenhagen’s Kastrup Airport, Norwegian officials decided as long as seven years ago that it would eventually sell off the state’s remaining stake, and it has resisted requests for shareholders to bail out the airline during troubled times that demanded new capital infusions. The ministry Isaksen now heads was granted power to sell during the former Labour Party-led government in 2011, at a time deemed most financially appropriate. The current Conservative government clearly decided that time was now.
“We see that SAS has had positive development (after years of losses and trauma that resulted from deregulation of the airline industry internationally),” Isaksen said, at the same time that it faces a wave of consolidation in the airline industry. SAS, a founding member of the global Star Alliance of airlines, has long been considered a takeover target, with giant German airline and Star Alliance partner Lufthansa as a likely suitor. Lufthansa later backed off and now has expressed interest in SAS’ arch rival in Scandinavia, Norwegian Air. That may set off a bidding war for Norwegian, which already was being courted by British Airways’ parent company IAG. The outcome can likely have consequences for SAS.
Isaksen stressed at his morning meeting with the Norwegian media that the state’s sale of its SAS shares would have “no consequences” for passengers. He had earlier been on national radio, telling state broadcaster NRK that the days when state authorities set airline routes and even staffing requirements for nationally controlled airlines are over.
He also seemed to downplay the sale, noting how “it has been signalled for a long time.” He also told newspaper Dagens Næringsliv (DN) that SAS “has been a company in which the state only has been interested in its returns on investment.”
He said the state was “satisfied” with the share price it received of SEK 17.25, even though it’s lower than it was last autumn. After news of the state’s sale was announced, SAS shares opened at NOK 15.85 on the Oslo Stock Exchange, down 3.65 percent.
The buyers of the state’s stake were said to be investors from both Norway and abroad. Analysts had predicted they would include the Danish government, which remains keen to have some influence over SAS’ operations through the airline’s major Copenhagen hub. NRK reported Wednesday morning that the Danish finance ministry stated, however, that it had not bought more shares in SAS.
The sale generates NOK 597 million for the state, the proceeds of which Isaksen said “will go straight into an account at Norges Bank,” Norway’s central bank.