SAS Threatens to Cancel Order for Douglas Jets : Scandinavian Carrier Ties Decision to Bid for Access to More Airports in U.S.

From Reuters

Scandinavian Airlines System threatened Friday to cancel a planned $1.5-billion order for McDonnell Douglas jets, and buy European Airbus planes instead, unless the United States gives it greater access to the American market.

SAS's board said it had received an aggressive counterbid from Airbus Industrie, a consortium of British, French, West German and Spanish interests.

A statement issued after a board meeting in Copenhagen on Thursday night said a decision on ordering 12 new McDonnell Douglas jets is being postponed pending the outcome of government negotiations on air traffic rights across the North Atlantic.

It leaves just 11 days until a deadline set by McDonnell Douglas for the conclusion of SAS's biggest aircraft order.

In December, SAS signed a letter of intent to buy 12 McDonnell Douglas MD-11 aircraft, a new long-haul jet, to replace its fleet of aging DC-10s. At that time, SAS rejected the rival Airbus' A-340.

Shortly afterward, U.S. carriers launched a price war, slashing fares between Scandinavia and this country. In response, the governments of Sweden, Denmark and Norway demanded to renegotiate traffic rights with the United States.

"U.S. carriers are benefiting from an open skies policy in Europe whereas SAS can only fly to New York, Chicago, Seattle and Los Angeles," a spokesman for the airline said. "What we want is to be able to compete on the same terms in the U.S. market."

In Copenhagen, an official of the Danish Transport Ministry said U.S. negotiators had reacted positively to the Scandinavian demands for an "open sky" policy during talks in Washington last week. The two sides are due to meet again in June.

The three Scandinavian governments jointly have a 50% stake in SAS. The rest is privately owned.

The SAS move represents a major boost for Airbus Industrie, which is fighting to secure enough orders for the A-340 to launch the project.

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