SAS Scandinavian Airlines will cease to be Scandinavian-controlled following a deal with Air France-KLM and US-based private equity firm Castlelake earlier this month.
The SAS board accepted a $1.175-billion bid from a consortium led by Castlelake and Air France-KLM for the airline, once the flag carrier of Denmark, Norway and Sweden.
Air France-KLM will initially take a 20% stake in the carrier, but the agreement includes provisions whereby “Air France-KLM may become a controlling shareholder after a minimum of two years, subject to regulatory conditions and financial performance”.
The Swedish government will forfeit its 22% stake in SAS, leaving the Danish state holding almost 26%, alongside Castlelake with 32% and Danish investment firm Lind Invest just under 9%, with the remaining shares held by creditors. The Norwegian government sold its stake of SAS in 2018.
Details of the takeover “remain to be finalised” and subject to “certain conditions and regulatory approvals”, including by the EC and US and Swedish courts. SAS has been in Chapter 11 bankruptcy protection in the US since July 2022.
The initial deal will cost Air France-KLM $145 million. Benjamin Smith, Air France-KLM chief executive, said: “With its well-established position and Scandinavia and strong brands, SAS offers tremendous potential.
“Air France-KLM looks forward to establishing strong commercial ties with SAS. This cooperation will allow air France-KLM to enhance its position in the Nordics.”
SAS noted in a statement that it “will continue to operate as usual throughout the implementation of the transaction”.
Casten Dilling, SAS chairman, said: “We’re confident the selected bid is the most favourable for SAS.”
SAS president and chief executive Anko van der Werff added: “The investment shows our new investors believe in our potential to remain in the forefront of the airline industry.”
SAS will seek US approval for the deal in early 2024 and hopes to gain Swedish approval later next year. However, the go head from regulators may be compounded by uncertainty about the outcome of an EC review of $356 million in pandemic-era state aid to SAS by Denmark and Sweden.
The SAS board launched a business transformation, SAS Forward, in February 2022, aimed at restructuring the airline’s debt and fleet and securing “a significant capital injection”.
Air France-KLM’s involvement in the takeover of SAS mirrors, in part, that which saw Lufthansa Group acquire 41% of Italian carrier ITA Airways – successor to Alitalia – in May this year.
The ITA deal remains subject to regulatory approval but gives Lufthansa the option to take full control of ITA subject to hitting certain targets.
Lufthansa’s move will see ITA switch from the SkyTeam alliance led by Air France-KLM to the Lufthansa-led Star Alliance and give the German carrier a bigger presence in the important inbound market to Italy (Travel Weekly, June 1).
Air France-KLM has a similar option to take control of SAS after two years, giving it an enlarged presence in the important Scandinavian outbound market, while the deal will see SAS switch from the Star Alliance to SkyTeam.
In the meantime, Air France-KLM “will seek to establish a commercial cooperation between its airlines and SAS”.
In a statement, Air France-KLM noted its “ambitions to enhance the group’s footprint in Scandinavian markets”, adding: “Air France-KLM is determined to play an active role in the consolidation of European aviation.”