Braathen Safe employees support takeover by SAS

In May 2001, the SAS airline made a takeover bid for its troubled main competitor in Norway, Braathen Safe. The deal will be closely monitored by the Norwegian Competition Authority because, if approved, it will give SAS a monopoly in Norwegian civil aviation. Most Braathen Safe employees and their trade unions welcome the deal.

On 21 May 2001, the Scandinavian airline company, Scandinavian Airlines System (SAS), made a takeover bid for its troubled main competitor in Norway, Braathen Safe. Braathen Safe and SAS have been the principal actors and competitors in Norwegian domestic aviation for over half a century, and with the latest announcement it seems that SAS has come out on top in the battle between the two. Braathen Safe has been losing money for years, and there are fears of bankruptcy if it fails to find a partner or buyer with sufficient financial muscle. Following a process of assessing its financial situation, the different challenges facing the airline and the strategic options available, the management of Braathen Safe came to the conclusion that the only viable solution was to approach SAS about a takeover.

Although the deal remains to be formalised, SAS has stated that it will not have any effect on the employment situation in Braathen Safe. The SAS press release states that "the agreement by Scandinavian airline SAS to acquire Norwegian domestic airline Braathen Safe ASA provides a basis for growth and value creation in both companies. Jobs, route networks and the Norwegian civil aviation system will be safeguarded by this deal."

Braathen Safe is partly owned by the founding Braathen Safe family (38.8%), and partly by the Dutch-based airline KLM (30%), as well as by other smaller shareholders. SAS is a consortium consisting of the three national airlines SAS Danmark A/S, SAS Norge ASA and SAS Sverige AB. Half of the shares in each of the three parent companies are owned by the respective state, and half by private interests. Braathen Safe employs approximately 5,000 employees in Norway, while SAS employs approximately 27,000 in total, of whom 9,000 are located in Norway.

The deal will be closely monitored by the Norwegian Competition Authority (Konkurransetilsynet), because it will beyond doubt give SAS a monopoly position in Norwegian aviation. Consumer associations in Norway has called the takeover bid a threat to free competition, and warn that it may have detrimental effects on airfares, flight schedules and the number of flight routes. Furthermore, the civil aviation authorities have warned that it may lead to the closure of a number of airports in Norway if the overall number of flights is reduced. The competition authority has already taken the initiative to find other potential buyers in an effort to prevent SAS becoming a monopoly airline. Unless other buyers are found, however, it seems that the national authorities will have to approve the SAS takeover bid, since the only alternative is Braathen Safe's bankruptcy. The competition authority has also argued that SAS must sell part of its Norwegian operations, a small airline called Widerøe, before the purchase of Braathen Safe can be approved. The deal is subject to governmental approval.

Most trade unions represented at Braathen Safe support the takeover deal. Aviation employees organised in the Norwegian Union of Employees in Commerce and Offices (Handel og Kontor, HK) welcome the move, because over te past few years there has been significant uncertainty with regard to the fate of the airline, and worries about job losses. Employee representatives at Braathen Safe blame the company's problems on Norwegian aviation policy and state tariffs for air traffic, and especially the political parties' unwillingness to change the present system of taxation on flights, which is seen to favour SAS at the expense of Braathen Safe. Nevertheless, employees at Braathen Safe would rather see the familiar "enemy" of SAS taking over, rather than being merged with or taken over by a foreign and unknown airline. In this way, the new owner will be an employer that is familiar with Norwegian aviation and with Norwegian industrial relations traditions. The alternative, according to the trade unions, is the dismantling of Braathen Safe with the loss of 5.000 jobs.

Local representatives of Luftfartens Funksjonærforening (LFF), an independent aviation trade union, also support the takeover. Furthermore, the president of the Confederation of Vocational Unions (Yrkesorganisasjonenes Sentralforbund, YS), Randi Bjørgan, has stated in a press release that the desire to see competition should not be allowed to overshadow the fact that a significant number of jobs are at stake, and that the selling of Widerøe will serve only to move the problem to another small airline. Given the conditions under which domestic airlines operate and compete today, the best solution is to allow for a takeover by SAS, Ms Bjørgan concludes.