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amei93
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LH acquisition of SAS?

Thu Apr 02, 2020 1:03 pm

The European industry are facing an increasing pressure with a high number of participants and increased competition. In recent years consolidation in the industry has for a long time looked inevitable and with the growing negative impact of the coronavirus and the strict measures forced upon air traffic, the need for innovation and restructuring is evident.

An acquisition will reduce competition in the European market and SAS could benefit a lot from joining a big group as Lufthansa. Norwegian have been giving SAS fierce competition on short-haul distances, by joining Lufthansa they would improve their connectivity across Europe making giving them a competitive advantage. Further, with additional funds from Lufthansa, they could also improve their long-haul. The demand for traveling in Scandinavia could result in Lufthansa positioning additional long-haul aircraft in Scandinavia to capture the demands of cross-continent travels, which would further increase the competition between SAS and Lufthansa resulting in worse prospects for both.

Costs reduction could also be achieved by aligning sales efforts, and along with stricter capacity discipline, this could increase margins. We see from experience that there are significant investor benefits to be made by replicating the economies of scale that the biggest US airlines have achieved. Furthermore, consolidation will make the new airline better suited in meeting increasing environmental standards as SAS has a younger fleet which will benefit Lufthansa.

SAS should be kept as a subsidiary, and not be merged into the Lufthansa brand.

What are your thoughts about this? They have previously been in talks, but due to the large pension liabilities and unions it have stranded.
 
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zkojq
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 3:49 pm

I hope not. I like both airlines a lot but Europe doesn't need more consolidation. As much as I like them, LH Group is powerful enough as it is. I hope SAS stays independent.
First to fly the 787-9
 
CALMSP
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 4:00 pm

lets all pray that doesn't happen. Sooner than later it will end up as LH Group, IAG, AF/KL. hopefully regulators in the EU will recognize and wake up that mergers provide nothing to the consumers.
 
PHLspecial
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 4:00 pm

I don't think Scandinavian countries like being taken over. They are neutral, I will see myself out
 
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SASViking
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 4:09 pm

The relationship between SAS and Lufthansa have gone significantly downhill in the last couple of years, so I really doubt that any of them have any interest in a merger/acquisition in the short term. The current situation with COVID-19, is not helping either.
The competition from Norwegian isn't that fierce in Sweden and Denmark where SAS is significantly bigger, it's pretty much only in Norway where SAS and Norwegian are competing for the same passengers. From Denmark and Sweden Norwegian mainly operates flights targeting leisure travellers whilst SAS's main target is business travellers. And still, from Denmark at least, SAS have a bigger presence on the leisure market than Norwegian.
SAS are already expanding and improving long haul, their LH fleet have increased in the last couple of years with the 5 (1 as a direct replacement for their spare A340) A330's. On top is their A350 and A321LR orders.
Types flown: A319, A320, A32N, A321, A332, A333, A343, AT43, AT75, AT76, B717, B732, B735, B736, B737, B738, B752, B753, CRJ9, DC10, DH4D, DHC3, E135, E145, E175, E190, E195, F100, MD11, MD81, MD82, MD87, RJ1H
 
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PatrickZ80
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 5:22 pm

Indeed I don't see it happening.

I can definitely see SAS merge with someone, however not with Lufthansa. First of all that would make the Lufthansa group too big, and second Lufthansa and SAS aren't exactly on good terms with each other.

There are however other European carriers SAS could merge with. I'm thinking about LOT Polish Airlines for example. Both are about equally big and could complement each other without one being the upper party. A SAS-LOT group would hold a significant market share within Europe without being too big (the Lufthansa group would still be bigger). Therefor the authorities are likely to approve that merger, while that's a lot less likely if it would be Lufthansa.
 
amei93
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 11:31 pm

SASViking wrote:
The relationship between SAS and Lufthansa have gone significantly downhill in the last couple of years, so I really doubt that any of them have any interest in a merger/acquisition in the short term. The current situation with COVID-19, is not helping either.
The competition from Norwegian isn't that fierce in Sweden and Denmark where SAS is significantly bigger, it's pretty much only in Norway where SAS and Norwegian are competing for the same passengers. From Denmark and Sweden Norwegian mainly operates flights targeting leisure travellers whilst SAS's main target is business travellers. And still, from Denmark at least, SAS have a bigger presence on the leisure market than Norwegian.
SAS are already expanding and improving long haul, their LH fleet have increased in the last couple of years with the 5 (1 as a direct replacement for their spare A340) A330's. On top is their A350 and A321LR orders.


How have the relationship between them gone downhill? I have not noticed this, so this is just out of curiousity.

I get your point about Norwegian and Norway, but as we are moving towards a world where every company are trying to limit their emission footprint I can see that there will be less business travel and more meetings done over the internet. SAS have to capture the leisure travellers from Norwegian if they want to be a leading player in this industry.

I still see there can be much to gain for both parties (and possibly consumers) with a merger like this. E.g. Consollidation of routes would free up fleets which can be used for possibly new routes or improve ongoing routes. This could make both companies more efficient and increase their revenue per mile.
 
amei93
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Re: LH acquisition of SAS?

Thu Apr 02, 2020 11:37 pm

PatrickZ80 wrote:
Indeed I don't see it happening.

I can definitely see SAS merge with someone, however not with Lufthansa. First of all that would make the Lufthansa group too big, and second Lufthansa and SAS aren't exactly on good terms with each other.

There are however other European carriers SAS could merge with. I'm thinking about LOT Polish Airlines for example. Both are about equally big and could complement each other without one being the upper party. A SAS-LOT group would hold a significant market share within Europe without being too big (the Lufthansa group would still be bigger). Therefor the authorities are likely to approve that merger, while that's a lot less likely if it would be Lufthansa.


Regarding the antitrust issues, I believe it will be approved as LH is the 2. biggest in Europe while SAS i nr. 11. in total passengers
A LH/SAS merger would indeed make LH group number 1, but both AIG and Ryanair have had significant larger growth the past years then what LH have.
LH need to continue to grow to keep their position, and the organic growth have slowed down and they need to find other ways to grow.
 
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SASViking
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Re: LH acquisition of SAS?

Fri Apr 03, 2020 12:28 pm

amei93 wrote:
SASViking wrote:
The relationship between SAS and Lufthansa have gone significantly downhill in the last couple of years, so I really doubt that any of them have any interest in a merger/acquisition in the short term. The current situation with COVID-19, is not helping either.
The competition from Norwegian isn't that fierce in Sweden and Denmark where SAS is significantly bigger, it's pretty much only in Norway where SAS and Norwegian are competing for the same passengers. From Denmark and Sweden Norwegian mainly operates flights targeting leisure travellers whilst SAS's main target is business travellers. And still, from Denmark at least, SAS have a bigger presence on the leisure market than Norwegian.
SAS are already expanding and improving long haul, their LH fleet have increased in the last couple of years with the 5 (1 as a direct replacement for their spare A340) A330's. On top is their A350 and A321LR orders.


How have the relationship between them gone downhill? I have not noticed this, so this is just out of curiousity.

I get your point about Norwegian and Norway, but as we are moving towards a world where every company are trying to limit their emission footprint I can see that there will be less business travel and more meetings done over the internet. SAS have to capture the leisure travellers from Norwegian if they want to be a leading player in this industry.

I still see there can be much to gain for both parties (and possibly consumers) with a merger like this. E.g. Consollidation of routes would free up fleets which can be used for possibly new routes or improve ongoing routes. This could make both companies more efficient and increase their revenue per mile.


A lot of codeshares between LH and SAS on SAS routes to Germany, except FRA and MUC, have been cancelled. Codeshares on flights to the US are totally gone too, mainly due to the A++ JV which SAS were unhappy to be left out of. Recently Lufthansa have also ended their partnership with SAS Ground Handling at CPH and have moved to Terminal 2.
All codeshares left pretty much only benefit Lufthansa, and SAS have to offer them because they otherwise would have massive gaps unserved in the world.
Types flown: A319, A320, A32N, A321, A332, A333, A343, AT43, AT75, AT76, B717, B732, B735, B736, B737, B738, B752, B753, CRJ9, DC10, DH4D, DHC3, E135, E145, E175, E190, E195, F100, MD11, MD81, MD82, MD87, RJ1H
 
AMS18C36C
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Re: LH acquisition of SAS?

Sat Apr 04, 2020 11:50 am

Besides all the points mentioned above, isn't the LH Group having trouble getting SN and OS to turn a profit? Don't know if you want to add another airline then.
 
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eta unknown
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Re: LH acquisition of SAS?

Sat Apr 04, 2020 4:05 pm

With LH now asking for a handout from the German Govt., with what money would they possibly use to buy SAS? As correctly stated above, LH have their hands full dealing with OS & SN.
 
MHG
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Re: LH acquisition of SAS?

Sat Apr 04, 2020 9:44 pm

I doubt that the EU would allow this to happen without strong "handcuffs" for LH attached to it.
Adding SAS to the LH group would not benefit customers, worse it would significantly reduce competition on the intra-European market translating into less choice and higher fares.

As a German (admittedly not a fan of LH Group) I can only hope SAS will find one or more partner(s) to create a counterweight - at least to some degree- in continental Europe.

LOT is certainly a possible partner.
(they do everything they can to p...s off LH at the moment - LH treated them quite bad not too long ago and now LO is able to pay back ...;) )
Flying is not inherently dangerous but it is very unforgiving in case of carelessness, incapacity or neglect.
 
jfk777
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Re: LH acquisition of SAS?

Sat Apr 11, 2020 11:37 am

SAS is an attractive merger partner but unlikely with Lufthansa. LH owns four airlines in countries contiguous to Germany. IAG or AF/KLM would be better merger partners. TAP would be a better merger for the LH Group since they are in a different part of Europe and would help LH in Latin America.
 
VSMUT
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Re: LH acquisition of SAS?

Sat Apr 11, 2020 12:23 pm

PHLspecial wrote:
I don't think Scandinavian countries like being taken over. They are neutral, I will see myself out


Neutral in what sense?
 
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PatrickZ80
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Re: LH acquisition of SAS?

Sat Apr 11, 2020 1:44 pm

jfk777 wrote:
SAS is an attractive merger partner but unlikely with Lufthansa. LH owns four airlines in countries contiguous to Germany. IAG or AF/KLM would be better merger partners. TAP would be a better merger for the LH Group since they are in a different part of Europe and would help LH in Latin America.


TAP is already heavily codesharing with Lufthansa on their South American network. They're not part of Lufthansa, but they're close. In such they're in a similar position as Finnair is to IAG for the Asian market.

An acquisition of SAS by either IAG or Air France-KLM would require it to change alliances. Of course this is doable, but not an easy decision. You might lose feeder partners in other parts of the world because of that, so you'd think SAS would prefer to stay in Star Alliance. That would make LOT a good partner, also in Star Alliance and also outside the Lufthansa group.

The other two Star Alliance airlines in Europe are TAP and Aegean. TAP is already leaning towards Lufthansa, but Aegean might be interesting. They can provide coverage of the Mediterranean region and the Middle East. Meanwhile SAS and LOT can provide coverage in northern Europe and the long distance markets. However I'm not too sure how Aegean would feel towards that.
 
airhansa
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Re: LH acquisition of SAS?

Tue May 12, 2020 11:05 pm

The vast majority of long-haul flights by SAS depart from CPH, and of these most of them fly to the Americas (whereas Finnair has the market for the east). I would assume that the distance between CPH and AMS is minimal, so KLM could theoretically buy SAS and merge the CPH hub into AMS, using SAS as a feeder service to the KLM hub. It would help strengthen an already attractive location hub for isolated areas of Western Europe - it's already got a good foothold in the UK & Ireland market and the rest of the European ocean is Nordic.
 
VSMUT
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Re: LH acquisition of SAS?

Wed May 13, 2020 4:32 am

airhansa wrote:
The vast majority of long-haul flights by SAS depart from CPH, and of these most of them fly to the Americas (whereas Finnair has the market for the east). I would assume that the distance between CPH and AMS is minimal, so KLM could theoretically buy SAS and merge the CPH hub into AMS, using SAS as a feeder service to the KLM hub. It would help strengthen an already attractive location hub for isolated areas of Western Europe - it's already got a good foothold in the UK & Ireland market and the rest of the European ocean is Nordic.


KLM doesn't need SAS as a feeder, they already do that job better than SAS. They have better coverage of Scandinavia outside the capital cities than SAS does. They fly 16 times a day between Denmark and Amsterdam, 24 from Norway and 13 from Sweden. That's not even counting Air France flights.
 
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PatrickZ80
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Re: LH acquisition of SAS?

Wed May 13, 2020 6:00 am

VSMUT wrote:
airhansa wrote:
The vast majority of long-haul flights by SAS depart from CPH, and of these most of them fly to the Americas (whereas Finnair has the market for the east). I would assume that the distance between CPH and AMS is minimal, so KLM could theoretically buy SAS and merge the CPH hub into AMS, using SAS as a feeder service to the KLM hub. It would help strengthen an already attractive location hub for isolated areas of Western Europe - it's already got a good foothold in the UK & Ireland market and the rest of the European ocean is Nordic.


KLM doesn't need SAS as a feeder, they already do that job better than SAS. They have better coverage of Scandinavia outside the capital cities than SAS does. They fly 16 times a day between Denmark and Amsterdam, 24 from Norway and 13 from Sweden. That's not even counting Air France flights.


True. Besides that, the Amsterdam hub can hardly be strengthened even further. It's severely slot restricted. It sounds nice moving the Copenhagen flights into Amsterdam, but it's just plain impossible. There are no slots for these flights, they cannot be moved into Amsterdam. Amsterdam is already full as it is.

So even if KLM would acquire SAS, they wouldn't gain much with it. The flights would have to remain in Copenhagen anyway as that's the only place where they got room for them. Then what would be the point?
 
VSMUT
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Re: LH acquisition of SAS?

Wed May 13, 2020 7:25 am

PatrickZ80 wrote:
VSMUT wrote:
airhansa wrote:
The vast majority of long-haul flights by SAS depart from CPH, and of these most of them fly to the Americas (whereas Finnair has the market for the east). I would assume that the distance between CPH and AMS is minimal, so KLM could theoretically buy SAS and merge the CPH hub into AMS, using SAS as a feeder service to the KLM hub. It would help strengthen an already attractive location hub for isolated areas of Western Europe - it's already got a good foothold in the UK & Ireland market and the rest of the European ocean is Nordic.


KLM doesn't need SAS as a feeder, they already do that job better than SAS. They have better coverage of Scandinavia outside the capital cities than SAS does. They fly 16 times a day between Denmark and Amsterdam, 24 from Norway and 13 from Sweden. That's not even counting Air France flights.


True. Besides that, the Amsterdam hub can hardly be strengthened even further. It's severely slot restricted. It sounds nice moving the Copenhagen flights into Amsterdam, but it's just plain impossible. There are no slots for these flights, they cannot be moved into Amsterdam. Amsterdam is already full as it is.

So even if KLM would acquire SAS, they wouldn't gain much with it. The flights would have to remain in Copenhagen anyway as that's the only place where they got room for them. Then what would be the point?


They could always upgauge the flights. A SAS takeover funneling traffic into Amsterdam could utilize the SAS A321s, or you could use some A330s (from either KLM or SAS) to shuffle between the hubs.

But I can't see how it would work. Either KLM continues flying from rural airports to Amsterdam, in which case using SAS to funnel traffic through would be pointless, or
KLM would drop all rural routes in favour of funneling traffic via SAS hubs, which would reduce total capacity from rural areas (because SAS has few domestic routes to begin with) and add an unattractive extra connection.
 
TUGMASTER
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Re: LH acquisition of SAS?

Wed May 13, 2020 2:32 pm

This thread has turned to nonsense.
 
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PatrickZ80
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Re: LH acquisition of SAS?

Wed May 13, 2020 4:05 pm

TUGMASTER wrote:
This thread has turned to nonsense.


True, the idea of KLM acquiring SAS is indeed nonsense. Not worth discussing any further.

However it is worth discussing who might be a candidate. Obviously KLM isn't and neither is Lufthansa, as was determined earlier. I think I'll stick with my opinion for LOT Polish Airlines. Both airlines are in a similar position and more or less equally big, they could help each other out.
 
IADCA
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Re: LH acquisition of SAS?

Wed May 13, 2020 8:53 pm

PatrickZ80 wrote:
TUGMASTER wrote:
This thread has turned to nonsense.


True, the idea of KLM acquiring SAS is indeed nonsense. Not worth discussing any further.

However it is worth discussing who might be a candidate. Obviously KLM isn't and neither is Lufthansa, as was determined earlier. I think I'll stick with my opinion for LOT Polish Airlines. Both airlines are in a similar position and more or less equally big, they could help each other out.


LOT is state-owned. That's a pretty tough sell when you're talking about acquiring a carrier that is part-owned by two other governments and is critical to the domestic transportation infrastructure of a third.
 
Albert12
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Re: LH acquisition of SAS?

Fri May 15, 2020 5:20 am

I don't think Scandinavian countries like being taken over. They are neutral, I will see myself out
 
VSMUT
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Re: LH acquisition of SAS?

Sun May 17, 2020 5:01 pm

Albert12 wrote:
I don't think Scandinavian countries like being taken over. They are neutral, I will see myself out


Didn't you make this claim in another post? Denmark and Norway and in NATO. Sweden and Denmark are in the EU. Plenty of our corporations are owned by foreign organizations. Denmark even sold the national serum institute's production arm to a Saudi prince with suspected relations to Islamic State in 2016. Sweden let the Chinese take over their car production.
 
fessor
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Re: LH acquisition of SAS?

Mon May 18, 2020 8:03 am

If sas have to med de with someone i see it be LO and TK they Will be able to make a 4th airline group in Europe.
But Lot and SAS will be perfect.

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