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SAS Stake Sale Chances Improve

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The conditions for a sale of part state-owned airline SAS have improved since late last year when the loss-making group agreed a rescue package, Sweden's financial markets minister said on Friday.

After years of losses, SAS' funding banks came close to pulling the plug at the end of 2012, but a drastic survival plan has given chief executive Rickard Gustafson a two-year window to turn things around.

"We have tried to sell SAS for a number of years, but it was obvious that when the company found itself in a severe crisis, it was impossible to sell," Financial Markets Minister Peter Norman said.

"Now the situation regarding the company has calmed down after the turbulence in the autumn, so I think that the likelihood of a sale has increased."

SAS, 50 percent owned by the governments of Sweden, Norway and Denmark, has struggled for years with higher costs than rivals Ryanair and Norwegian. Over-capacity in the industry, high jet fuel prices, and a European economic downturn haven't helped.

SAS hasn't made a full-year pretax profit since 2007 and a series of turn-around plans failed to get it back into the black.

Late last year, the airline agreed a package of measures aimed at boosting profit and strengthening the balance sheet that will see it cut staffing by around 40 percent through asset sales and efficiency measures

SAS has said that if fuel prices do not rise and the European crisis doesn't worsen, it should make a profit this financial year.

Most analysts, however, believe SAS will not survive as an independent airline in the longer term, with most going for Lufthansa - with which SAS already has close ties - as the most likely, if not only possible, buyer.

Norman declined to say whether there were any discussions ongoing with possible buyers, but said that price might not be the only criterion for a would-be purchaser.

"Price is one component. But there can also be others," he said. "It is about finding a serious buyer with whom we can be confident that Swedish air traffic is secure for the foreseeable future." He gave no further details.

In the November-January period, SAS reported a pretax loss of SEK823 million kronor (USD$128.62 million), sharply down on the loss of SEK2.7 billion in the same period a year ago.

(Reuters)