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Proposed SAS acquisition of Braathens creates a stir.

AIRLINE INDUSTRY INFORMATION-(C)1997-2001 M2 COMMUNICATIONS LTD

The planned alliance between SAS and Braathens has reportedly only received praise from one Norwegian politician, the former minister of transport and communications Kjell Opseth.

Opseth has said that he recommended such a move in the early 1990s and that it is not impossible that more seats sold could lead to cheaper tickets.

The Norwegian carrier Braathens has lost money every day since Oslo's Gardermoen airport opened, according to Arne A Jensen, the CEO of the company.

Jensen has said he believes that SAS is the only solution to halt the fare increases in Norway, despite predictions from others that fares will rise if SAS takes over. The current situation is that Braathens flies with 50% of its seats empty and due to the competition situation, fares have increased, Jensen said.

Jensen has also estimated that SAS has not been making any money in Norway since the opening of Gardermoen in 1998 due to the fierce competition.

While the Norwegian competition authorities, consumer organisations and politicians are hesitant about the deal, SAS has made a promise to keep the routes operated at the same level and says it intends to keep Braathens as an independent carrier with its own organisation. SAS has also promised to freeze ticket prices for two years unless something exceptional happens. Experts have however predicted higher ticket prices and fewer routes.

The competition authority (Konkurransetilsynet) has said that it may impose a temporary ban on SAS's acquisition of Braathens shares. The authority is to review the likely effects of the acquisition on the Norwegian market and has said that SAS may have to give up its 63% stake in Wideroe, another Norwegian carrier, if the company is to take over Braathens.

The takeover of Braathens by SAS would take place late this autumn if SAS manages to acquire a minimum of 90% of the shares and the necessary authority approvals are given.

The employees of Braathens have reportedly received the news with cautious optimism and the thought appears to be that their jobs may be safer than before if the deal goes through. The cabin crew members have been given written assurance that all jobs will be saved. Lisbeth Eliasson, the cabin crew representative in the Braathens management, has said that she prefers SAS as an owner to the Dutch carrier KLM as SAS has a better knowledge of the local market.

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Publication:Airline Industry Information
Date:May 23, 2001
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