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Braathens Asa Business Information, Profile, and History

Oksenoyveien 3
P.O. Box 55
1330 Fornebu
Norway

Company Perspectives:

Braathens is Norway's largest airline. Our mission is to offer good travel for modern people. We do this primarily through scheduled air service in Norway and Sweden. Additionally we are also part of the global KLM/Northwest alliance with continuous air service from Norway and Sweden to more than 400 destinations in over 80 countries worldwide. Braathens in Norway and Sweden operates on 16 Norwegian destinations, seven destinations in Sweden and 10 destinations outside these two countries.

History of Braathens Asa

Braathens ASA is Norway's largest airline. Most of its destinations are in Sweden and Norway, though Braathens has been affiliated with the KLM/Northwest global airline alliance. Thanks to the country's fjords and mountains, Norwegians take more plane trips per year per person than any other nationality except U.S. citizens.

Shipping Origins

Ludvig G. Braathen founded one of the largest shipping lines in Norway, Ludv G Braathens Rederi A/S, in 1926. Twenty years later, the airline bearing his name was started. The launch was delayed a decade by government intervention and war.

As Kjell Oskar Granlund details in Airways, Braathen had seen the potential of air freight as early as 1936, when he used KLM to deliver a replacement propeller shaft to a ship stranded in Jakarta. In 1937 he made the same pilgrimage as other European aviation pioneers, that of touring aircraft factories and airlines in the United States. He discussed the possibility of launching a transatlantic airline with Bernt Balchen of the prewar Det Norske Luftfartselskap (DNL). The following year (1938), Braathen unsuccessfully applied for rights to fly to the United States. Soon, World War II intervened: unlike Denmark and Sweden, Norway fielded no civil aircraft of its own during its occupation by Nazi Germany.

DNL was reestablished after the war as Norway's preferred scheduled airline. At practically the same time, Braathens South American & Far East Airtransport A/S (Braathens SAFE) was created to provide ad hoc charter services with Douglas war surplus cargo aircraft. It was incorporated on March 26, 1946.

Initially, Braathens found more demand for flights to the East than to the West. The first flight, Oslo-Copenhagen-Paris-Cairo, departed on January 30, 1947. Soon, Braathens SAFE was flying to Hong Kong via Amsterdam, Marseille, Cairo, Basra, Karachi, Calcutta, and Bangkok.

The success of Braathens SAFE was bringing it into contention with Scandinavian Airlines System (SAS). SAS was at the time a regional alliance of the state-sponsored airlines of Norway (DNL), Denmark (Det Danske Luftfartselskap or DDL), and Sweden (Svensk Interkontinental Lufttrafik AB or SILA). Braathens SAFE's license to fly to Hong Kong was suspended in April 1954 to keep it out of competition with the ever expanding SAS, which, notes Kjell Granlund, did not actually fly to Hong Kong until 1992.

In 1952, Braathens forged an alliance of its own with Loftlei'ir Icelandic Airlines, which had licenses to fly to both Europe and the United States. The decade-long cooperation between the two airlines extended to sharing aircrews and planes.

As compensation for losing its Far East routes, Braathens was allowed to begin domestic service between Oslo and Stavanger and between Oslo and Trondheim in August 1952. Braathens added another local destination when it took over an airline based in Bergen in 1958. The airline, Vestlandske Luftfartselskap, had been founded, like Braathens, by shipping interests as a charter company after the war. In subsequent years, Braathens agreed to limit its range to southern Norway, while SAS concentrated on the north.

In 1959, Braathens began flying charters to the island of Spitzbergen for the mining company Store Norske Spitsbergen Kulkompani. The ground at the landing strip was frozen solid enough to support planes during the winter months only, which conveniently coincided with the closing of the fjord to sea traffic. Traffic grew and a proper airport was constructed eventually, but the government awarded the route to SAS during the early 1970s.

Jets in 1969

Braathens began operating Boeing 737 jets in January 1969. Although a few Fokker F28 jets arrived a couple of months later, Braathens would remain loyal to Boeing for decades.

Company founder Ludvig G. Braathen died in 1976 and was succeeded by his son Bjorn. Erik G. Braathen, grandson of the founder, took over in 1989. Braathens had recently standardized the fleet with the Boeing 737. Norway was developing plans to deregulate its air industry along European Union lines (though the country was not itself a member).

During this time it was proposed that SAS should take over Braathens SAFE. The Braathen family opposed this and instead listed the company on the Oslo stock exchange.

Deregulation in 1994

Norway's airline industry was deregulated on April 1, 1994. Braathens seemed to fare well at first, claiming a 51.8 percent market share in Norway in 1996. At the time, Braathens had a fleet of 25 aircraft, all Boeing 737s. The airline was carrying more than five million people a year. Charter traffic accounted for less than 20 percent of operations in the mid-1990s; the company had made a decision to focus on scheduled services ten years earlier.

Both Braathens and SAS recorded their 50th anniversaries in 1996. Both introduced promotional fares to celebrate--Braathens offered roundtrips within Norway for only NKr 500 ($75).

The new environment allowed Braathens to challenge SAS on the Oslo-Stockholm route in 1996. Braathens acquired a controlling interest in Transwede Airways in the same year, bringing it into the domestic Swedish market. The remaining shares were acquired in 1998, and this unit was renamed Braathens Sverige.

In August 1998, Braathens acquired another Swedish airline, Malmö Aviation, for SKr 600 million ($74 million). Malmö operated a busy route connecting Stockholm with the country's west coast and was Sweden's second largest domestic carrier. It earned pre-tax profits of SKr 400 million ($48.8 million) on turnover of SKr 911 million in 1997 and had 11 BAe 146 jets and 450 employees. The acquisition gave Braathens control of a quarter of the domestic Swedish market.

The Braathens SAFE name was abbreviated to simply Braathens A/S in 1998. A new corporate logo was introduced that featured a stylized wing over an aurora borealis.

Changes and Challenges in the Late 1990s

KLM Royal Dutch Airlines acquired 30 percent of Braathens' stock in 1997 for Fl 200 million (£60 million) and brought the carrier into limited participation in the KLM/Northwest Airlines global alliance. Braathens began making changes to attract more lucrative business class customers. The carrier introduced its first dual class cabins in 1997. At the time, Braathens connected 14 destinations in Norway, seven in Sweden, and another eight in Europe.

Unfortunately, Braathens posted its first loss ever--NOK 23 million ($2.5 million) in 1998. Overcapacity in the domestic market and problems at the new international airport in Gardermoen contributed. The loss exploded to NOK 612 million in 1999.

Upon the retirement of Erik Braathen, the company hired Arne A. Jensen as chief executive in March 1999. Jensen was the first person outside the family to hold this position. Before joining Braathens, he had been chief executive and editor-in-chief of the Norwegian television company TV2. Braathens was not the only one in trouble. SAS was taking losses and Color Air, a domestic Norwegian start-up, stopped flying in September 2000.

Jensen took a number of actions to restore the company's profitability. Money-losing routes were closed. The engine maintenance division was sold off to Pratt & Whitney.

Flying with SAS in 2001

With bankruptcy looming, an agreement was worked out in May 2001 for archrival SAS to take a controlling interest in Braathens, buying out the 38.8 percent held by the Braathen family and the 30 percent held by KLM. Malmö Aviation, the Swedish operation, was not to be included. At NKr 35 ($6.32) a share, the deal was to value the Norwegian operations at NKr 1.13 billion ($124 million). Norwegian officials strongly opposed the takeover on antitrust grounds, yet had few alternatives to offer.

In the middle of this process, Braathens named a new leader--Mr. Vida Meum. Arne Jensen left to head the information technology group Merkantildata. In November 2001 Meum announced plans to cut as many as 800 of 4,000 jobs, eliminate

On November 27, 2001, SAS announced that it was proceeding with its takeover bid, but at a reduced price due to the global downturn in the industry following the September 11 terrorist attacks on the United States. At NKr 27 ($3) per share, the offer valued KLM's 30 percent stake at NKr 34 million ($30 million). SAS also was buying out other principal shareholders.

Principal Subsidiaries: Braathens Holding AB (Sweden); Braathens (Cayman) Leasing Ltd. (Cayman Islands); Braathens (Cayman) Leasing II Ltd. (Cayman Islands); Braathens (Cayman) Leasing III Ltd. (Cayman Islands); Braathens (Cayman) Leasing IV Ltd. (Cayman Islands); Braathens 737-500 1 1990 AS; Smart Norge AS (30%); Spitsbergen Travel AS (16%); Wings Lojalitetsutvikling AS.

Principal Competitors: Wideroes Flyveselskap ASA.

Related information about Braathens

Braathens airline, until 1997 known as Braathens S.A.F.E or Braathens South American and Far East Air Transport A/S merged with the Norwegian part of Scandinavian Airlines to become SAS Braathens in 2004. The airline was based in Oslo, first at Fornebu, later at Gardermoen.

History

Far East

The airline was founded on March 26 1946 by Norwegian ship owner Ludvig G. Braathen, with the intention of serving his ships in other parts of the world, and started operating charter routes to the Far East and to South America using US Air Force surplus Douglas DC-4 aircraft, departing for the first time on January 30 1947.

Originally the flights were only flown during the day, with hotel overnighting for passengers and crew. The route flown was Oslo - (Stavanger) - Amsterdam - Marseille - Cairo - Basra - Karachi - Calcutta - Bangkok - Hong Kong. In total Braathens SAFE flew 75 flights to Hong Kong in 1947 and 1948.

Det Norske Luftfartsselskap (DNL, later SAS) had a monopoly on international flights from Norway.

Braathens SAFE also flew to both Venezuela and Panama in 1948, but failed to get proper permissions, and didn't set up regular flights.

But when the Scandinavian Airlines System was set up in 1951, it was given a monopoly on international flights originating and operating from Scandinavia. Via an agreement with Icelandic airline Loftleidir that lasted for 10 years, Braathens SAFE could, with Icelandic concessions, operate their DC-4 routes from Europe to the US, via Iceland. This resultet in Braathens SAFE getting a fair number of concessions, among others to Stavanger and Trondheim.

The first domestic route flown by the airline was Oslo - Tønsberg - Stavanger with De Havilland DH.114 Heron aircraft, the first delivered May 3 1952. In 1953 the airline got permistion to fly temporarily to Trondheim, and in 1956 permenently, two routes that the airline operated until its algamation with SAS. Røros 1953 and Kristiansand 1955 were also incorporated into the domestic routes.

In 1956 the airline got the concession to also fly Kristiansand - Stavanger - Bergen and Oslo - Ålesund (from 1958), both with monopolies. This settlement was not changed until Braathens SAFE got consession to fly between Western Norway and Northern Norway from 1967.

On September 22 1958 the airline received its first Fokker F-27 Friendships, having replaced all the Heron aircraft by 1959.

Into the Jet Age

Braathens ordered its first jet aircraft, Boeing 737-200 in 1965. Originally the airline had planned on ordering Boeing 737-100 aircraft, but instead ordered Fokker F-28. The two 737s were first only used for charter, while the four F-28s were to replace the F-27s on the domestic routes.

Kristiansund's new airport, Kristiansund Airport, Kvernberget, opened in 1970, with Braathens SAFE receiving the concession. Two years later, in 1972, Braathens also started flying to the new Molde Airport, Årø airport in the neighbour city Molde. Stavanger - Haugesund - Bergen was added in 1974. Braathens SAFE started after a bit its own helicopter company, Braathens Helikopter, that they later sold to their main competitor, Helikopter Service.

In 1984 Braathens SAFE received two Boeing 767-200 aircraft with 242 seats, used both on domestic and charter operations.

Deregulation

The first steps of the deregulation of the Norwegian airline market came in 1987 when Braathens SAFE was allowed to fly Oslo - Bergen, Oslo - Trondheim - Bodø and Tromsø - Svalbard, while SAS was allowed full access to the routes Oslo - Stavanger and Oslo - Trondheim. In 1989 Braathens SAFE was once again allowed to fly international routes, with their opening of the Oslo - Billund route. Later international routes were Oslo / Bergen / Stavanger - Newcastle and Tromsø - Murmansk. Within two weeks in October 1992 both Dan-Air and Norway Airlines went bankrupt, and with 11 days notice Braathens SAFE started the route Oslo - London-Gatwick.

The same year, on April 1 the Norwegian domestic marked was deregulated, and any Norwegian or European airline was free to fly any domestic or international route in Norway. The previous year, Braathens SAFE had bought the Swedish airline Transwede, and in 1998 Malmö Aviation. The Norwegian flag was removed from the tailplane, and replaced with the company's new logo, an abstract blob of grey.

The same year KLM Royal Dutch Airlines bought 30 percent of the shares from the Braathen family, and Braathen became part of the KLM-Northwest alliance, which also was to be joined by Alitalia, but who later decided not to. Northwest Airlines also started flying to Oslo from their hub at Minneapolis.

The most controversial bit of the new image was the concept of Braathens Best and Braathens Back. With the introduction of Norway's first low-cost carrier, Color Air, a price war broke out between the three domestic airlines. Though Color Air only operated 13 months in 1998 and 1999, the fierce competition forcing them into bankruptcy. SAS lost money too, but its profitable operations internationally and domestically in Denmark and Sweden made them invincible.

Braathens never recovered from the price war, and the general decline of the airline market didn't help. From April 1 2004 Scandinavian Airlines Norway and Braathens were merged into SAS Braathens. In response to this, Norwegian Air Shuttle, who previously had been operating Fokker 50 aircraft for Braathens on the west coast routes, decided to lease in Boeing 737-300 aircraft and start a low cost airline under the brand name Norwegian.

The Braathen family still owns the Swedish airline Malmö Aviation, which was separated from Braathens as a result of the takeover by SAS.

Fleet

The Braathens fleet consisted of the following aircraft before the merger:

4 Boeing 737-400
13 Boeing 737-500
9 Boeing 737-700

Historic fleet

Historic fleet operated by Braathens SAFE (1946 - 2004)

Model	Quantity	First in	Last out
Douglas C-54skymaster	6	1947	1966
Douglas C-47Dakota	2	1947	1964
De Havilland DH.114Heron	7	1952	1960
Fokker F-27Friendship	8	1958	1977
Douglas DC-6A/C	1	1961	1965
Douglas DC-6B	7	1962	1973
Cessna 206super Skywagon	1	1964	1966
Fokker F-28Fellowship	6	1969	1986
Boeing 737-200	20	1969	1994
Boeing 767-200	2	1984	1986
Boeing 737-400	7	1989
Boeing 737-500	17	1990
Boeing 737-700	9	1998
Total	93

The Boeing and Fokker aircraft were all named after Norwegian kings. The pilot was killed.

On the day before Christmas Eve December 23 1972, Braathens suffered a fatal accident when Braathens Flight 239 crashed while approaching Fornebu airport, killing 40 people. It was then the worst airliner accident ever in Norway.

The 737-200 jet LN-SUG was hijacked on June 21 1985 on its route from Trondheim to Oslo.

Chronology

Key Dates:
1946: Braathens SAFE is formed by shipping magnate Ludvig G. Braathen.
1952: Braathens is awarded domestic routes.
1958: Braathens takes over Vestlandske Luftfartselskap.
1969: Jet service begins.
1976: Second generation assumes the leadership of the company.
1994: The Norwegian air industry is deregulated; Braathens goes public.
1996: Control of Transwede Airways is obtained.
1997: KLM acquires 30 percent of Braathens stock.
1998: Malmö Aviation is acquired.
1999: Arne Jensen becomes first executive outside Braathen family to lead the airline.
2001: SAS agrees to acquire controlling interest in Braathens.

Additional topics

Company HistoryAirlines & Air Transport

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