Air France-KLM’s Calculated Acquisition of SAS


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In a surprising turn of events, Air France-KLM has acquired a 19.9% stake in Scandinavian Airlines (SAS). This acquisition is part of a broader restructuring plan for SAS, which filed for Chapter 11 bankruptcy last year. But what sets this deal apart are the nuances that could redefine the European aviation landscape.

The Deal Unveiled

The consortium leading this acquisition includes American private equity firm Castlelake, holding a 32% stake, and Danish investment firm Lind Invest with 8.6%. The Danish government will continue to hold 25.8% of SAS. The consortium plans to invest $1.175 billion in SAS, comprising $475 million in common stock and $700 million in secured convertible bonds.

Key Takeaways:

  • Air France-KLM’s stake: 19.9%
  • Castlelake’s stake: 32%
  • Lind Invest’s stake: 8.6%
  • Danish government’s stake: 25.8%
  • Total investment: $1.175 billion

The Element of Surprise

The aviation industry was abuzz with speculation that the deal would be an ‘all-local’ affair, keeping SAS under Scandinavian control. The emergence of Air France-KLM as the lead partner in the winning bid was a curveball that left market analysts scratching their heads. Adding another layer of intrigue is the option for Air France-KLM to take a controlling stake in SAS after no less than two years. This opens up a plethora of strategic possibilities and sets the stage for further consolidation in the industry.

Strategic Implications and Alliance Shuffle

While the investment is a lifeline for SAS, it effectively wipes out the value for current shareholders. SAS has stated that “only a modest recovery” should be expected for the holders of commercial hybrid bonds.

Air France-KLM’s acquisition of SAS is a calculated move to expand its influence in the Nordic region. Benjamin Smith, CEO of Air France-KLM, expressed enthusiasm about establishing strong commercial ties with SAS. The deal is expected to improve connectivity for Scandinavian and European travellers significantly. One of the most eye-catching aspects of this deal is SAS’s decision to leave Star Alliance, of which it was a founding member. The airline plans to join SkyTeam, strengthening Air France-KLM’s alliance network. This move is a blow to Star Alliance, weakening its position in Northern Europe.

The Bigger Picture for Alliances

This acquisition is not an isolated event but part of a larger trend reshaping the European aviation landscape. Lufthansa’s acquisition of Italy’s ITA and IAG’s interest in TAP signal a wave of consolidation that could see three flag carriers absorbed into bigger groups by the end of 2024. This could lead to a realignment of alliances, affecting frequent flyer programs, route networks, and even airline operations on a global scale.

In the context of the Nordic region, other airlines that are part of alliances include Finnair, which is a member of the Oneworld alliance, and Norwegian Air Shuttle, which, while not a member of any of the three major alliances, has codeshare agreements with Oneworld’s British Airways and Finnair. The departure of SAS from Star Alliance to SkyTeam could trigger a domino effect, prompting these airlines to reconsider their alliance affiliations to maintain a competitive edge.

The shift of SAS to SkyTeam could make the alliance more attractive to other Nordic airlines, thereby altering the balance of power among the global alliances. This is especially crucial given the strategic importance of the Nordic region as a gateway to international destinations, including North America and Asia.


Air France-KLM’s acquisition of a stake in SAS is a game-changing move that alters the landscape of airline alliances and strengthens the Franco-Dutch airline group’s position in Scandinavia. As the deal awaits regulatory approval, the aviation industry watches closely, anticipating the ripple effects of this strategic manoeuvre.

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