SAS Group acquires 49 percent of Estonian Air

SAS AB has signed an agreement with Danish Maersk Air A/S to acquire 49
percent of the shares in the Estonian airline Estonian Air. The other
shareholders of Estonian Air are the Estonian Government with 34 percent
and the Estonian investment banking firm AS Cresco with 17percent. SAS
AB has also signed an agreement with Cresco covering a possible increase
of SAS shareholding in Estonian Air. In addition to Estonian Air, SAS AB
acquires 100 percent of the shares of Maersk Air Maintenance Estonia AS,
a company based in Tallinn providing technical maintenance for aircraft..
The total purchase price is MSEK 180.
Strong position in the Baltic States
The acquisition is part of the SAS Group`s strategy to strengthen its
position in the Baltic region. Scandinavian Airlines inaugurated traffic
between Stockholm and Tallinn already in 1989 and at the time was the
first Western European airline that opened scheduled flight connections
to Estonia. Since then, expansion in the Baltic States and Finland has
played a central role in the SAS Group`s positioning in the area. This
includes the SAS Group`s involvement in airBaltic, Latvia, and the
wholly owned Finnish company Air Botnia.

Estonian Air has a strong base in its routes to Copenhagen and Stockholm
and has favorable prospects for future expansion.
“Estonian Air is a profitable, strong and growing company in
a strategically highly attractive region. Traffic to and from Estonia is
expected to increase by at least 8-10 percent annually,” says Gunnar
Reitan, Executive Vice President, Subsidiary & Affiliated Airlines.
The acquisition is expected to have a neutral effect on the SAS
Group`s earnings during 2003 and a positive effect in 2004. In addition,
synergy effects are estimated to arise in 2004 amounting to about MSEK
35. Estonian Air has a positive net debt (net cash) and the
EDITDAR/capitalized leasing expenses plus net debt amounts to about 0.22
(0.13 for the SAS Group). The Group`s capitalized leasing expenses will
not be affected by the acquisition. Net debt for the Group increases by
MSEK 180, corresponding to 0.8 percent of the Group`s total net debt.

Favorable development in Estonian Air
Estonian Air was formed in 1991 and privatized in 1996. At that time,
Maersk Air acquired 49 percent of the shares. In conjunction with the
privatization, the company was restructured and Boeing 737-500s and
Fokker 50s were leased. Estonian Air serves routes between Tallinn and
Copenhagen, Stockholm, Moscow, Kiev, Vilnius, Frankfurt, Hamburg,
Berlin, Oslo, Paris and London. Most traffic is to Stockholm and

Estonian Air has 311 employees and during the past two years has
reported net profit of MEEK 14 in 2001 and MEEK 39 in 2002.
Estonian Air will continue to operate as an independent airline
under its own brand.