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SAS Scandinavian Airlines Will Change Alliances

A major equity investment will align the carrier with Air France-KLM

SAS brand new Airbus A350XWB awaiting it’s first scheduled departure from Chicago O’Hare (Photo: AirlineGeeks | Ben Suskind)

In July of last year, SAS Scandinavian Airlines entered court-supervised Chapter 11 bankruptcy proceedings. The well-established process left the airline operating almost as usual, handling the union crisis with the pilots. After more than a year, the company resurfaces with groundbreaking news. It has selected the winning bidder for a major investment in the company that is supposed to take it out of its troubled position. The company announced the changes in a press release late Tuesday.

The Agreement

SAS selected U.S. investment firm Castlelake and Air France-KLM along with the Danish state to collectively take a majority stake in the carrier. Castlelake is said to take 32% holding of the company with Air France-KLM holding 20%. The total equity transaction in the reorganized SAS will correspond to $1.18 million (SEK 12.925 billion) including $475 million (SEK 5.225 billion) in newly issued equity shares and $700 million (SEK 7.7 billion) in secured convertible debt. Additionally, Castlelake will refinance $500 million (SEK 5.5 billion) of the outstanding debt burdening the company.

Significant implications of that investment will change the competitive landscape of Europe. As a part of the transaction SAS will exit the Star Alliance, subject to any relevant approvals and join the SkyTeam Alliance, one Air France is a founding member of.

European Consolidation

This development comes in as the third major consolidation move happening this year. Earlier this year, after battling through the pandemic and fighting off antitrust concerns, International Airlines Group, the parent company of British Airways and Iberia, announced it had finalized the Air Europa takeover that began in 2019. Following that, the multiyear uncertainty period that Alitalia went through has been finally put to rest. In another one of the big transactions, Lufthansa Group took a 41% stake in the Italian flag carrier, now branded ITA. The Air France-KLM investment puts them on an equal stance in this game for European market share.

Transatlantic Landscape

The transatlantic market is already massively consolidated towards the three joint ventures. Lufthansa Group formed “A++” with United and Air Canada. British Airways along with Iberia aligned with Finnair and American Airlines on the other side of the ocean to create Atlantic Joint Business. Finally, in 2020 Air France-KLM finalized coming together with Virgin Atlantic and Delta. Each of the joint ventures corresponds to one of the three alliances: Star Alliance, oneworld, and SkyTeam.

While Air Europa will help the International Airlines Group consolidate the Latin-American portion of the transatlantic market, it is very well probable that ITA is on its way to join the joint venture with Lufthansa Group and SAS will do the same with Air-France-KLM. This is a major development in the competitive market and one that will definitely make the regulators pay attention.

Filip Kopeć
Latest posts by Filip Kopeć (see all)


  • Filip Kopeć

    A passionate aviation enthusiast that started off his career as an aerospace engineer, but found his true calling on the commercial side of the airline business. Now as a finance guy among avgeeks and an avgeek among finance guys, he has experience working in the Revenue Divisions of three airlines. In his spare time he enjoys traveling, but admittedly sometimes is more about the journey than the destination.

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