Today, the SAS Board of Directors announced the selection of Air France-KLM Group as the winning candidate, collectively with Castlelake, L.P. (on behalf of certain funds and affiliates) and Lindt Invest ApS following Scandinavian Airlines’ financing solicitation process.
Air France-KLM would thus obtain a maximum of 19.9% non-controlling stake of SAS’s share capital. This commercial agreement has not yet been finalized, as it will need to be approved by shareholders and regulatory authorities such as the European Commission. The transaction represents an investment of US$144.5 million by Air France-KLM.
“This is an important day for SAS and for Air France-KLM. We are pleased to be part of the winning bidding consortium selected by the board of SAS. Air France-KLM looks forward to establishing strong commercial ties with SAS. With its well-established position in Scandinavia and strong brand, SAS offers tremendous potential to Air France-KLM. This cooperation will allow Air France-KLM to enhance its position in the Nordics and improve connectivity for Scandinavian and European travelers. We look forward to being a part of this new chapter in SAS’ history and thank the board of SAS for their trust.”- Benjamin Smith, Directeur général du Groupe Air France-KLM
What does this mean?
If the agreement is approved, it means that SAS will leave Star Alliance to eventually join SkyTeam, the alliance of which Air France is a founding member. The transaction is expected to take place in the second quarter of 2024, and Scandinavian Airlines will continue to operate as usual during its implementation.
As a result, Star Alliance members Aeroplan and Air Canada would no longer be able to offer flight bookings on SAS. Instead, we can imagine that Flying Blue, Air France-KLM’s frequent flyer program, would take over. However, we don’t yet know when this transition will take place, and nothing has been said about loyalty programs for the time being.
It’s not uncommon for airlines to enter into commercial agreements of this kind with others; we saw it here with the conclusion of WestJet’s acquisition of Sunwing.
In Europe, the Lufthansa group recently signed an agreement to acquire 41% ofITA Airways. TAP Air Portugal, a Star Alliance member and Aeroplan partner, was also recently put up for sale by the Portuguese government. The Lufthansa and Air France-KLM groups have both expressed an interest in TAP, so we’ll keep an eye on this.
Scandinavian Airlines represents Sweden, Denmark and Norway. Founded in 1946, it was one of the founding members of Star Alliance over 25 years ago. Considering the flights it operates in these countries as well as internationally to Asia, Europe and North America, this transition to the Air France-KLM group, when finalized, will have a considerable impact on the connectivity offered by the SkyTeam alliance, despite that of Star Alliance.
We will keep an eye on the progress of this potential transaction as it nears completion.