SAS sells Blue1 to CityJet

SAS Scandinavian Airlines is to sell its Blue1 subsidiary to CityJet of Ireland in a further move to outsource its services on regional and thinner routes.

SAS recently announced that UK regional carrier Flybe would be taking over a tranche of its regional services.

CityJet will acquire 100% of Blue1’s shares for an undisclosed sum and the Finland-based carrier’s name will disappear. Dublin-based CityJet currently has a small network of destinations in Western Europe.

“SAS’s strategy is to offer frequent travelers a broad network with frequent flights to, from and within Scandinavia,” said SAS in a statement Oct. 1. “To adapt the size of the production to traffic flows SAS utilizes hired capacity ... with smaller regional jet and turboprop aircraft.”

The new arrangement will begin from the start of the summer 2016 program, with CityJet operating “basically on existing routes,” SAS spokesman Henrik Edstrom told ATW.

“This is part of our strategy to have regional operators operating thinner routes to make them profitable.” As well as Flybe, Danish carrier Jet Time also flies for SAS.

The sale of Blue1 would have a “marginal impact” on SAS’s income before tax, cash and net debt, said the Scandinavian carrier. Income after tax during Q4 2014/2015 would be negatively impacted by around SEK90 million ($11 million), primarily due to write down of capitalized loss carry-forwards.

The sale and the new wet lease agreement are expected to increase cost efficiency and flexibility. 

As part of the agreement, CityJet will acquire eight new Bombardier CRJ900 regional jets, with the aircraft being wet-leased to SAS and operating in the Scandinavian carrier’s colors. The wet-lease agreement will run for three years, and contains an option for the acquisition of a further six aircraft.

CityJet has been looking for a replacement for its fleet of 18 Avro RJ85 regional jets for some time.

The new CRJs, in a high-density 90-seat configuration, will be put into service from March 2016 “on routes and at times when there is a need for smaller aircraft.”

SAS already operates 12 CRJ900s through its Danish subsidiary, Cimber.

“We are looking forward to working with CityJet to further expand our regional route network and thereby strengthen SAS’s offering to frequent travelers.

The eight brand new CRJ900s from CityJet will provide us with efficient and flexible production of regional flights that will complement SAS’s production on the larger traffic flows,” said SAS president and CEO Rickard Gustafson.

 “This is a fantastic opportunity for CityJet to work with a leading airline such as SAS,” said CityJet chairman Patrick Byrne.

“We are looking forward to a long-term cooperation, where we will deliver a high level of quality in terms of efficiency and customer service for SAS passengers.

We are also keen to benefit from the experience and knowledge of the Nordic airline industry that the acquisition of Blue1 will give us.”

(Alan Dron - ATWOnline News)