Air France May Buy SAS Stake - Report

January 13, 2009

Air France KLM, which this week announced the purchase of a 25 percent stake in relaunched Italian carrier Alitalia, is also looking at Scandinavian airline SAS, according to French paper La Tribune.

"SAS has begun an informal consultation process and has contacted us," an internal Air France KLM source told La Tribune, in an article in Wednesday's edition of the paper.

Air France KLM officials could not be reached immediately for comment and SAS declined to comment on the report.

"We confirm, as we have done earlier, that we are in a process where we are looking at structural possibilities, that discussions are ongoing concerning structural measures," said SAS spokeswoman Elisabeth Manzi.

In September, sources said that Germany's Lufthansa was in talks to buy troubled SAS, which has long been tipped as a takeover target.

Like others in the industry, SAS -- half of which is owned by Sweden, Norway and Denmark -- has been forced to contend with cut-price rivals and overcapacity.

La Tribune reported that Air France KLM considered SAS as an "interesting" opportunity, but was worried by SAS's financial position.

SAS signed a preliminary deal in December to sell a majority stake in its loss-making Spanair unit.

Earlier this week, SAS posted a 12.5 percent year-on-year fall in December passenger traffic and said it expected to cut capacity further this year.

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