Air France-KLM plans a 19.9% non-controlling stake in Scandinavian Airlines System (SAS), a move that would lead to much closer commercial ties and the move of SAS from Star Alliance to SkyTeam.
The Future Of SAS In Star Alliance in Doubt After Air France-KLM Pursues Sizable Stake
Air France-KLM is taking advantage of the weakened position of SAS to seek a sizable but non-controlling share in the beleaguered airline (“Air France-KLM Group, Castlelake, L.P., on behalf of certain funds or affiliates, and Lind Invest ApS (collectively, the ‘Consortium’)”). Under the proposal, Air France-KLM would control just shy of 20% of the Danish-Norwegian-Swedish airline and closely collaborate to increase commercial ties.
Air France CEO Benjamin Smith lauded the news:
“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.”
Before the agreement is finalized, it must receive approval from:
- European Commission
- the US court overseeing the bankruptcy
- a Swedish court
Upon arrival, the consortium and Danish government plans to invest $1.175 billion, of which $475 million in common shares and $700 million in the form of secured convertible bonds. Of that total, Air France-KLM’s investment would total $144.5 million, of which $109.5 million would be invested in common shares and $35 million would be provided in the form of secured convertible bonds.
Closer commercial cooperation will be contingent upon SAS leaving Star Alliance. SAS is one of the five founding members of Star Alliance. It will join SkyTeam upon partnering with Air France-KLM.
As part of the transaction, SAS is intended to eventually join the SkyTeam Alliance (“SkyTeam”), of which Air France-KLM is a founding member, and exit the Star Alliance, subject to any relevant approvals and emergence from the chapter 11 process.
SAS CEO Anko van der Werff spent 10 years at Air France-KLM before working for Qatar Airways, Aeromexico, Avianca, and now as CEO of SAS. How much does he stand to gain from the deal? And will van der Werff run SAS into the ground as he did with Avianca?
CONCLUSION
Air France-KLM is proposing a 19.9% stake in Scandinavian Airlines as it emerges from bankruptcy. While the agreement is subject to regulatory and court approval, the move would represent a substantial change in the landscape of the European market and also mark an alliance shuffle, with SAS leaving Star Alliance.
More details here.
The biggest question (for me) is what happens to EuroBonus as a CPH based flyer. Will it get absorbed into Flying Blue?
I’m curious to see how SAS’ US route network will be affected. I definitely expect them to shift capacity away from Star hubs like EWR, ORD, and IAD and into SkyTeam hubs like JFK, BOS, and ATL
Never saw that coming. I guess LH will strengthen ITA ties now. So long to EWR and IAD with SAS. But expect UA to launch a slew of flights now to CPH and others.
Why wouldn’t they keep flying to those cities? Or to ORD?
EWR will shift most flights to JFK to better connect with DL and SkyTeam. IAD has no use without UA as a partner, they mostly fly an A321 at this point anyway, so little use now in keeping a station open with very little connectivity and very light point to point traffic. I never said ORD, as it’s possible that there is enough point to point traffic there to justify it, but it’s still suspect without a big SkyTeam presence. In time it may shift to DTW or MSP. LAX and BOS are probably safe, with MIA as well in a limited capacity. Bottom line will be that JFK and ATL will become the new focus for SAS to survive its niche status to the US.
@ Matthew — Seems like a good match. A crappy airline for ST.
Yeah, as opposed to the fabulous (ex) 5-star one dominating Star Alliance, and the other one that provides free entertainment at the LHR baggage halls in thirdworld.
I am very surprised at the news. If AFKL manage to pull off the TAP deal, and given that CSA is planning to restart a number of routes after it receives a bunch of new A220s next year, SkyTeam may once again become relevant for European travel.
Am I the only one who doesn’t see this is as a loss? I never found SAS’s flight schedule or product to be compelling.
I flew to Copenhagen on an SAS award from New York at a reasonable 35,000 miles one way. United want 75,000. I plan to go to Norway and Gothenburg so I now will need to use Air France miles.
Hmmm does this mean United will fly to CPH out of SFO, EWR, or IAD? Delta can have SAS if we can get ITA. We all know United flies to Italy the most out of the big 3.
I was a big fan of SAS, at least in business class. I see this as a very big loss.
SAS is the only European Star Alliance airline which doesn’t give lounge access at outstations (TAP did try that nonsense during the pandemic but has gone back to normal), and the only one outside of the LH Group that excludes the *G bag benefit from certain fares. Last time I flew with them, my fare earned nothing on most Star programmes and I had to switch the FFP number to my VS one to get 250 miles…which never posted. And, of course, there’s no business class in their European flights so you may pay thousands for a transatlantic business class ticket and end up in a middle seat for the four hours to/from OPO.
They are not an awful airline, and it’s been good to have a *A option with realistic one-way pricing for N. European travel (LH and co. are still asking for ridiculous amounts of money), but certainly no reason for any short-haul flyer to become a fan.
SAS cut all contract lounges to save money, that is true. You are still able to access *A lounges where available. Though SK is not the only non-LH group airline to cut the luggage benefit. As a SK*G member currently residing in New Zealand, I can tell you from experience, Air New Zealand also did on their Seat fares. Suddenly Seat+Bag turns into Seat+2 Bags.
It’s the only one in Europe. A3, LO, TK, and TP all offer the luggage benefit (I think I have read that LH offers it on long-haul). Not sure about Croatia Airlines, not that they have a whole lot of flights.
I’m a long-time SK Diamond member (with millions and millions of hard-earned points) based in Stockholm, as is my wife. This is a heavy, heavy loss. We use pretty much all our points on premium redemptions to exotic destinations with TK, BR etc.
I don’t think I’ve ever seen United show an itinerary with SAS outside of mileage redemptions when looking at US-Europe flights. Will still be a shame to lose especially once Delta mileage redemptions on them will cost many multiples more than United charges.
This shows the CPH hub was not viable. The whole region will become spoke cities for CDG and maybe CPH will be a regional focus city, if even that. Oslo could be a focus city for Norwegian domestic routes.
This shows that Scandinavian racial superiority is non existent. They can’t even support an international airline fortress hub.
“This shows that Scandinavian racial superiority is non existent”
You really can’t help yourself, can you?
I suggest you should go seek some help, with the issues you are clearly suffering from…
Strange, since SkyTeam in Europe is the only region where they are very good at, the rest of the world kinda meh. How much would it help if they join an alliance with a strong DL-VS-AFKL JV presence in the region already?
They are pretty strong in the Far East (I recently flew GA in Y and CI in J, both of which were amazing- and they also have KE, which is very solid, VN, and two Chinese airlines), and their position in Africa is also quite good with KQ and a lot of intercontinental flights.
The addition of SAS is a game changer for intra-Europe travel, particularly as AMS needs to be deemphasised due to the Netherlands having an obsession with reducing flights. KLM fly to 17 UK airports and the vast majority of their UK pax connect to/from elsewhere; shifting some of that traffic to CPH shouldn’t be a problem.
(Low-cost airlines aren’t really an option for those travelling for work and/or pressed for time because many/most of their routes only have 2-3-4 flights a week)
I don’t disagree that ST is pretty good in the east, but *A just dominates that space with NH, SQ, BR and TG, And OW’s JL and CX are pretty comparable. Not too sure about Africa but just not in my bucket list lol.
Sounds like you have a better read of the SAS’s advantages than me, so I’ll just say I’d believe you :>
As a EuroBonus member in Stockholm. Not sure I’m happy about this. Actually. I’m pretty annoyed. But having never flied KLM, I’ll have to see how it turns out.
KLM onboard service is generally thought to be above average (I haven’t flown with them in many years so no relevant first hand experience), but I detest AMS – there’s too much walking, taxiing can take forever, and the KLM lounges are more memorable for the resident mice than for their F&B offerings.
United doubled awards miles to 75,000 economy one way to Europe. SAS economy was about 35,000. United doubled Business to 150,000 miles. Rarely saw SAS business awards. Delta 300,000 in Business one way and about 125,000 in economy to Europe.
Schipol is like a subway station.
For those of us used to taking AF/KLM from up north, this also means a degradation of the lounge facilities. At least in ARN and CPH, the contract lounges are better than the SAS “Flagships”.
AMS is a pretty miserable place. The Polderbaan, as you noted, is an automatic 10-minute taxi delay. The lounges are sad, and the public transit links tend to fail (“maintenance”) on weekends.
Of course, CDG is its own kinda hell for those who don’t have lounge access.
I´d avoid AF, CDG and also the AF lounges like the plague. Not sure why anyone would do such a thing, unless you got rebooked or something.
I´m a huge fan of KLM and fly them over any other airline for transatlantic and even US to Asia routes through AMS. I like everything about the airline.
The best thing? KLM often times (I`d say north of 50%) sells you an upgrade to business class for 500-600 USD one-way. You just cant beat that.
This doesn’t solve the core issue with SAS. It’s still has a mindset of a government owned flag carrier. It could end up draining resources like Alitalia did for years. Someone needs to swing the sword to get the airline in shape for the 21st century.
Some of the details of the reorganization:
– Castlelake will become the biggest shareholder with a 32%
– Air France-KLM will hold 20%
– Danish government will hold 26%
– Lind Invest will control 8.6%
– Any remaining shares to be distributed among and held by certain creditors
– Current shareholder pretty much wiped out via re-organiztion
Funding:
-SAS will receive $475 million in new equity and $700 million in convertible debt via the reorganization
Very interesting. Maybe this will finally entice United to fly direct to CPH from ORD and EWR.
IAD wil be first for UA for sure. SAS will clearly abandon it right away. They could barely make a go with an A321 feeding UA. UA will do much better on the route and is a clear opportunity for them. EWR could in time. ORD I doubt as I don’t think SAS will abandon it so quickly given what must be some solid point to point traffic.
One of the best things about SAS is how hard it is for 430 credit score Americans to get biz tix on it with their costco toilet paper points.
An American coastal couple usually ruins the entire business class cabin. We hate you.