SAS agrees Spanair deal; FMI may launch rival bid

By Victoria Klesty and Ben Harding

STOCKHOLM/MADRID (Reuters) - Troubled Scandinavian airline SAS said on Thursday it had signed a preliminary deal to sell a majority stake in its loss-making Spanair unit to a Spanish investor group, the latest step in a multi-pronged turnaround effort.

However, British investment fund First Mile Investment (FMI) said earlier on Thursday it still planned a rival Spanair bid.

SAS also announced on Thursday it had signed an agreement to sell its 47.2 percent holding in airBaltic to airBaltic's management for around 220 million Swedish crowns, resulting in a gain of approximately 175 million crowns.

Earlier this week, Latvia rejected an offer by SAS to sell its stake in airBaltic back to the state for 47 million lats ($95.39 million).

SAS has said it wished to sell its airBaltic shares because the Baltic state, the majority shareholder in airBaltic, had refused fully to privatize the airline.

Like others in the industry, SAS has been forced in recent years to contend with cut-price rivals and overcapacity. It has lost money in every quarter so far this year.

The carrier -- half-owned by the governments of Sweden, Norway and Denmark -- said the Spanair deal was with a group of investors in Spain led by the Consorci de Turisme de Barcelona and Catalana d'Iniciatives.

It did not disclose financial details.