The embattled and heavily debt-laden Scandinavian airline SAS has agreed a major investment from a consortium of companies, including the Air France-KLM Group, which will see the Stockholm-based carrier leave the Star Alliance for rival Skyteam.
SAS entered Chapter 11 bankruptcy protection in the United States in July 2022, citing a range of factors, including the pandemic, rising fuel costs and a damaging pilot strike that brought the airline to the brink of collapse.
By gaining Chapter 11 protection, SAS has been able to continue operating while it restructures its debt and seeks additional investment. On Wednesday, the airline finally announced that it had reached a deal with a consortium of companies.
Under the terms of the proposed deal, the Air France-KLM Group will take a maximum 19.9% non-controlling stake in SAS at a cost of more than $144 million.
The other members of the consortium include:
- Investment firm Castlelake, which will take a 32% stake in SAS
- The Danish government, which will hold onto nearly 26% of SAS
- And Lind Invest, which will hold around 8.6% in the reorganised airline
The remaining 13.6% of the SAS will be “distributed among and held by certain creditors,” the airline said on Tuesday.
In total, the consortium will pump $1.17 billion into SAS, although the deal remains to be finalized and is subject to regulatory approval.
As part of the deal, SAS has agreed to exit the Star Alliance, of which it was a founding member, for rival Skyteam which is the airline alliance of Air France and KLM.
Air France-KLM chief executive Benjamin Smith said the deal would ‘enhance’ the group’s position in the Nordics and that SAS had ‘tremendous potential’.
The Franco-Dutch airline group has made no secret of the fact that it has been ‘shopping’ for potential acquisitions, reasserting the fact that it is “determined to play an active role in the consolidation of European aviation”.
In the last year, the Lufthansa Group managed to acquire Italy’s ITA Airways, while Europe’s airline giants are currently eyeing up TAP Air Portugal, which the Portuguese government is attempting to offload.
