June 8 (Bloomberg) -- SAS Group AB, the Nordic region’s biggest airline, aims to generate enough cash next year to finance expenses to make the carrier an attractive takeover target, Chief Executive Officer Mats Jansson said.“The goal now is to create cash and pay our investments with fresh cash flow from our operations,” Jansson said in an interview at the annual meeting of the International Air Transport Association in Berlin. “When we create positive cash flow and the unit costs are at the right level, then that would be the right timing to be part of another group.”
SAS began its 7.8 billion-krona ($966 million) cost-cutting plan, labeled Core SAS, in February 2009. The project, which includes the elimination of 4,600 jobs and the grounding of 21 planes, will run through 2011. The carrier is 65 to 70 percent through the plan and is “on track” to complete the program, Jansson said.Signs of recovery in demand are “even better” than in the first quarter, the CEO said yesterday. He declined to forecast second-quarter earnings. SAS has surplus liquidity after two rights issues totaling about 11 billion kronor, which allow the company to withstand “a lot of negative events,” he said.
But who would take SAS on? LH has been a reasonaby deeply integrated operational parter of SAS for a number of decades, but given their acquisitions of SN, OS, BD (and less recently LX), I would think that they would have problems both (a) with antitrust issues and (b) operationally trying to integrate so many carriers into the group at the same time. SN, OS and BD all pose their own challenges, and I very much doubt any of the three will be sufficiently "sorted" to allow LH to turn its attention to SK when the time comes.I personally would really like to see Finnair take over SAS, to create a powerhouse in the Nordic region. If the shorthaul network can carry its own weight (which is the goal before the airline is sold), it will combine nicely with Finnair's shorthaul network. The profitable longhaul routes to USA could continue under the OSA, and SK's only other non-USA longhaul routes (BKK, PEK, NRT and DXB) are all covered by AY out of HEL. Potential problem would be antitrust issues in combining Finnair and Blue1, leaving no competition in the domestic Finnish market, and also (less so) with AY's 10% holding in DY, which is SAS's only real competitor for internal Scandinavian (and particularly Norwegian domestic) routes.As a second choice, I think this would also be a great opportunity for Norwegian - they're in a great financial position, looking to expand their footprint within Scandinavia, and also have publically discussed intentions to start a long-haul offshoot. Problems would be (a) antitrust issues, since DY is SK's main competitor on intra-Scandinavian routes (not sure how much of a problem the Norwegian domestic overlap would be, since Norway isn't part of EU), and (b) even with the cost-cutting scheme, SK's cost base would still be significantly higher than DY's, so perhaps wouldn't work out for DY.Otherwise, SK could be a good addition to either the BA/IB group or the AF/KL group... but BA/IB will be busy with their own integration, and AF/KL might well see SK as a redundency, since AMS is already effectively Scandinavia's other airline hub.