Air France-KLM to take a stake in SAS – another step in airline consolidation

Premium Analysis

Air France-KLM's decision to take a stake of up to 20% in SAS, announced 3-Oct-2023, was something of a surprise. SAS chose a consortium comprising Air France-KLM, Lind Invest ApS, Castlelake (global investment firm), and the Danish state as the winning bidder as the Scandinavian airline looks to emerge from Chapter 11.

The surprising element is that SAS, a Star Alliance founder member, is now expected eventually to join SkyTeam. The deal raises the prospect that the Franco-Dutch group may become the future majority shareholder in SAS. Before that, Air France-KLM and SAS will seek to establish a commercial partnership, presumably to include the North Atlantic joint venture with Delta Air Lines.

In addition to receiving fresh capital from the consortium, Air France-KLM's extensive intercontinental network offers SAS customers a far wider range of global destinations via hubs in Paris and Amsterdam. SAS offers Air France-KLM an enhanced presence in Scandinavia, a region that has often proven difficult to penetrate for non-local airlines.

The deal is crucial to the emergence of SAS from Chapter 11, is another small step in European airline consolidation, and is evidence of Air France-KLM's return to financial strength.

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