SAS Sells 80% of Norway’s Wideroe Unit in Pursuit of Cost Cuts
SAS Group (SAS) said it plans to sell 80 percent of its Wideroe Flyveselskap AS unit for 2 billion kroner ($310 million) as the Nordic region’s largest airline seeks to slash costs and return to profit.
SAS will retain a 20 percent stake in the Norwegian regional carrier, with the option to transfer full ownership to buyers Torghatten ASA (TORG), Fjord1 AS and Nordland Fylkeskommune in 2016, the Stockholm-based airline said in a statement today. The carriers will continue to cooperate commercially.
The Scandinavian company is seeking to slash expenses as low-cost carriers including Norwegian Air Shuttle ASA on short- haul routes and network operators such as Air France-KLM (AF) Group reduce their own cost bases. The Wideroe deal will reduce SAS’s financial leverage by as much as 2.3 billion kroner if it sells out completely and trims the negative effect of amended reporting standards for pensions to 6.9 billion kroner.
“This divestment is in line with the 4Excellence Next Generation strategy to build a long-term financially strong SAS,” Chief Executive Officer Rickard Gustafsson said. SAS’s 4Excellence savings plan, introduced in November, aims to deliver 3 billion kronor in savings over the next two years.
Today’s transaction comes one month after SAS sold the majority of its ground-handling operations to Swissport International AG and includes Wideroe buying seven Dash Q400 jets that it was leasing from its parent. SAS said it expects a capital loss of 230 million kroner in the case of a full sale.
Separately, SAS said that a joint-venture agreed in 1995 with Deutsche Lufthansa AG (LHA) on flights between Scandinavia and Germany will end June 1. The airlines will continue to code- share and customers will not be negatively affected, SAS said.
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