page_title: History of Scandinavian Airlines System (1933–52)
section_title: Merger
hierarchical_section_title: History of Scandinavian Airlines System (1933–52) / Merger
caption_attribution_description: English: SAAB Scandia SE-BSD of SAS at London Airport (Heathrow)
context_page_description: The history of Scandinavian Airlines System from 1933 to 1951 covers the first attempts at transatlantic travel, the establishment of a consortium and finally the establishment of the consolidated SAS. Aerotransport, the national airline of Sweden, and Det Norske Luftfartselskap, the national airline of Norway, both started planning transatlantic routes in the mid-1930s. By 1939, negotiations were started with Det Danske Luftfartselskab of Denmark, and by 1940 services were to begin. Because of the German occupation of Denmark and Norway, the plans collapsed. In Sweden, Svensk Interkontinental Lufttrafik was founded to start private transatlantic flights, which commenced in 1945. Negotiations were started again, and in 1946 the consortium Overseas Scandinavian Airlines System was established to start routes to New York and South America.
  From 1948, the airlines pooled all their aircraft into European Scandinavian Airlines System, which used the SAS brand for all domestic and European services.
context_section_description: In September 1949, the Norwegian Ministry of Transport and Communications announced that DNL would be forced to leave ESAS at the latest on 1 April 1950. To keep the cooperation going, a committee was established, consisting of Wallenberg, Kampmann and Einar Isdahl from DNL. It recommended a full merger of the OSAS, ESAS and the operative divisions of the three national airlines. SAS would be established as a multi-national consortium, and the three national airlines would remain as holding companies. The consortium would be exempt from taxation, although the liability would be passed on to the holding companies, who would also own the aircraft and all real estate in the respective countries. The aircraft would be leased to SAS, who would also take over all employees.
  There were two main areas of disagreement. First was the location of the head office, which the Danish wanted located in Copenhagen and the Swedes wanted in Stockholm. Second was the distribution of technical facilities. While a single, large facility would give the lowest costs, the authorities in each country wanted to keep a large reserve of aircraft mechanics for the military. The committee also stated that a merged SAS would need to have identical concessions from all countries.
  In 1949, OSAS gave a profit of SEK 31,000, but all the national airlines had losses, with Aerotransport losing most at SEK 10.7 million. In political circles, there was an increasing understanding that the Swedish model with an equal private and state ownership should be followed by DDL and DNL. At the time, the Danish state owned 17.6% of DDL, and the Norwegian state 20% of DNL. As both companies were in need of increased share capital, processes were started whereby both governments would purchase shares to increase their ownership to 50%. Both the Danish and the Norwegian states bought shares for NOK and DDK 14 million, respectively, while in Norway private investors bought for additional NOK 11 million.
  The final negotiations were made in October 1950; it was agreed to locate the head office in Stockholm, while it was understood that the main hub would be Copenhagen Airport. Norway was left without a key asset, and the negotiators feared that Norwegian politicians would reject the merger if not granted additional benefits. It was therefore agreed that the allocation of maintenance facilities was to follow the 3–2–2 ratio, even if it would incur higher costs. The agreement was given a duration of 25 years. At the time, OSAS had seven DC-6 and one DC-3 used for training. ESAS had about 60 aircraft, including both DC-3, DC-4, DC-6, Sandringham, Vickers Viking, Saab Scandia and Ju 52.
  When passed in the Parliament of Denmark, the agreement received 77 against 14 votes in the Folketing, and with only one opposing vote in the Landsting. The opposing votes were cast by members of the Justice Party, who were principally opposed to state the state owning any companies, and the Communist Party, who were opposed to the private ownership. In Norway, there were supporters and opponents in all the parties. The debate took ten hours, and even among those who were in favor were skeptical. The proposal passed with 107 against 26 votes. The proposal was passed unanimously by the Parliament of Sweden.
  The final agreement was signed on 8 February 1951 at the same location as the former, in the head office of the Norwegian Shipowners' Association in Oslo. It was made retroactively valid from 1 October 1950, giving OSAS a profit of SEK 4.2 million in the first three quarters of 1950. OSAS had then made 2641 flights across the North Atlantic, 657 across the South Atlantic and 64 to the Far East, transporting 130,000 without accidents. From OSAS, 1,076 were transferred, along with 5,554 people from the national airlines and ESAS. The company had a capital of SEK 157 million (DDK 210 million or NOK 217 million), 59 aircraft and 6630 employees. Norlin was appointed CEO, deputized by Backe and Rasmussen.
caption: SAS Saab Scandia at London Heathrow Airport in 1953
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