Heisan67 From , joined Dec 1969, posts, RR: Posted (9 years 6 months 1 week 2 days 12 hours ago) and read 1401 times:
Fred Olsen sells his airline
Norwegian shipowner and industrialist Fred Olsen is getting out of the airline business. The companies his family controls will sell the cut-rate carrier Sterling, which played a key role in radically changing the commercial airline business in Scandinavia, to Icelandic investors.
Sterling was at the forefront of offering relatively cheap, one-way tickets to European destinations at fares far below those of dominant carriers SAS and, at the time, Braathens. SAS later took over Braathens when it ran into trouble competing with upstart Norwegian Air.
Norwegian also went into the European market and picked up the idea of discounted one-way fares sold on a first-come, first-served basis. Last fall, Norwegian started cooperating with Sterling on some key routes as both carriers struggled in the tough airline market.
Despite strong passenger growth, Sterling posted a loss of DKK 119.3 million in 2004, which it attributed mostly to high fuel prices and tough competition. The Fred Olsen companies injected more capital into Sterling to prop up its finances, and Sterling started the code-sharing with rival Norwegian in November.
Bonheur ASA and Ganger Rolf ASA, each with a direct and indirect ownership of 50% in the airline Sterling, have made a principle agreement with Fons Eignarhaldsfelag (“Fons”) on a sale of Sterling. The purchase price is DKK 400 million. Completion of the transaction, which is expected during April, is subject to due diligence and final share purchase agreement.
Fons is an Icelandic investment company controlled by the two partners Mr. Palmi Haraldsson and Mr. Johannes Kristinsson. They have previously been large shareholders in Icelandair, and are the current owners of the low-fare airline Iceland Express. Their investments further comprise a number of ownership interests in large international companies.
In commenting upon the agreement, Mr. Harald Andresen, the present CEO of Sterling states that ”Sterling has for a long period of time focused on the need for a consolidation within the airline industry, and has i.a. entered into comprehensive code-sharing agreements with other low fare operators, such as Norwegian and Fly Nordic. I believe that the change of ownership will result in a further vitalizing and consolidation as Island Express will be merged into Sterling. Sterling has a staff of highly skilled and motivated employees within all departments. This is probably the company’s most valuable asset. I am proud of the willingness and ability that has been demonstrated towards changes in a constrained period for the airline industry. I will personally devote my full support to the airline until the transfer in ownership has been completed.” Following completion of the transaction, Mr. Andresen will return to his former position as senior vice president within Fred. Olsen & Co.in Oslo. However, he will remain available as an advisor to the new owners during a period of up to 4 months.
Mr. Mårten Lunde, the Chairman of Sterling, states on behalf of Bonheur and Ganger Rolf, that ”we have during the recent years succeeded in establishing Sterling as the leading low-fare airline in Scandinavia. In order to further enhance this position it now appears natural to see a change in the ownership. Within the airline industry we realize that the requirement for critical mass is ever increasing at the same time as our companies’ investment strategy do not cater for a further escalation within this sector. The resulting effect is that we now terminate a 70 years era within the airline business.”
Palmi Haraldsson and Johannes Kristinson have on their side expressed the following in a comment to the agreement: “The travel and leisure industry trends remain very favorable as evermore budget-conscious passengers are increasingly turning to this travel solution.
Indeed, the present market fragmentation leaves the door open for the tapping of unexploited niche markets; be it in terms of new destinations or services offered.”
The new owners will bring along with them competence and experience from the low-fare segment through their ownership in Iceland Express as they have further stated that “ both Sterling and Iceland Express are strong brand names within their own markets with a fleet consisting of the most cost efficient aircraft within this segment. We are looking forward to working with Sterling.dk’s management and staff, knowing that no success can be achieved without the fundamental support and dedication from these. “