. Last Updated: 07/27/2016

SAS Launches Stake Bid for Estonian Air

STOCKHOLM -- Scandinavian air carrier SAS launched a bid for a majority 66 percent stake in Estonian Air, saying it wants to turn it into a profitable airline with Western aircraft but Estonian nationality.

Scandinavian Airlines System, the main carrier in Sweden, Norway and Denmark, said Thursday it was offering a long-term partnership and would inject $20 million in fresh capital into the Baltic airline.

The offer was a joint deal with the Bank of Tallinn, the Danish Investment Fund for Eastern Europe and Swedfund International AB.

"SAS's objective is to create a profitable and customer-oriented airline equipped with Western aircraft which will retain its Estonian nationality," SAS said in a statement. "The bid also opens up possibilities for cooperation between Estonian Air and the Latvian carrier Air Baltic in which SAS, the Danish Investment Fund and Swedfund are shareholders," it added.

According to the proposed bid, the Estonian government will retain 34 percent, SAS will own 28 percent and the Bank of Tallinn will have 17 percent, while the two investment funds will own 10.5 percent each.

Estonian air serves Scandinavia, northern Europe and the successor states of the former Soviet Union, mainly with Boeing 737 aircraft.

The airline took a 26.12 million kroon ($2.17 million) loss in 1995 and is on the government's privatization list.

The deal coincided with an announcement by SAS that it was cutting the number of its flights by 3 percent because of a shortage of pilots.

The cuts represent on average 3 percent of the company's combined output and represents a halving of planned expansion.

SAS has recently been hit by a shortage of pilots after a major rationalization program.