There’s big news in the aviation world, which could result in an airline leaving one alliance and joining another.
Today, it was announced that Air France-KLM, in conjunction with other entities, have been selected as the winning bidders in Scandinavian Airlines’s (SAS) restructuring process.
The Stockholm-based airline has been under bankruptcy protection for more than a year, and has been looking to carve itself a new path through the SAS Forward plan.
If approved, Air France-KLM will assume a 19.99% stake in the airline alongside the other stakeholders, and as part of the deal, SAS would exit Star Alliance and join SkyTeam.
Scandinavian Airlines to Leave Star Alliance for SkyTeam
On October 3, 2023, it was announced that Air France-KLM, in conjunction with private investment firm Castlelake, the Danish government, and Lind Invest, have been selected as the winning bidders in Scandinavian Airlines’s restructuring.
If approved, Air France-KLM will acquire a 19.99% stake in SAS, Castlelake will acquire a 32% stake, the Danish government will acquire a 25.8% stake, and Lind Invest will acquire an 8.6% stake.
In July 2022, Scandinavian Airlines entered Chapter 11 bankruptcy protection, which is a legal process in the US federal court system that other airlines have used to reduce costs and undergo financial restructuring.
Bankruptcy protection afforded SAS some time to secure funds. With a winning bid that’ll see $1.16 billion (USD) injected into the airline, SAS surpassed its initial goal of securing $855 million (USD).
As part of the deal, SAS will leave Star Alliance at an unspecified point in the future to join SkyTeam, the alliance to which Air France-KLM belongs.
SAS was a founding member of Star Alliance, and its departure would reduce the number of airlines in Star Alliance to 25, and raise the number in SkyTeam to 20.
The deal remains to be secured, pending finalization between SAS and the investing parties, as well as approval as part of SAS’s Chapter 11 bankruptcy protection proceedings.
What Does the Future Hold for SAS and Air France-KLM?
For now, it’s business as usual for SAS, which plans to continue its operations without interruption until the deal is finalized. If all works out, SAS expects the deal to be implemented in the second quarter of 2024.
Air France and KLM have strong networks operating from their hubs in Amsterdam and Paris, and the addition of SAS would add Nordic hubs to its network.
As it stands, SAS operates long-haul flights out of Copenhagen, Oslo, and Stockholm; however, it’s worth noting that its network isn’t quite as vast as those of Air France and KLM.
Aside from plenty of short- and medium-haul destinations in Europe and its environs, SAS currently only flies to three destinations in Asia, as well as nine destinations in Canada and the United States.
With access to Air France and KLM’s much wider route maps, passengers originating in Scandinavia would enjoy easy access to a broader network, including to destinations in the Middle East, Asia, and South America, as well as more destinations in North America.
It’s worth noting that SAS isn’t the only European airline whose future is in flux at the present.
Just recently, Star Alliance member Lufthansa acquired a 41% stake in SkyTeam-member ITA Airways, with options to acquire the rest from the Italian government in the future.
Furthermore, another Star Alliance member, TAP Air Portugal, has been put up for sale by the Portuguese government.
It’s reported that Air France-KLM is one of the interested parties, alongside International Airline Group, which governs Oneworld carriers British Airways, Iberia, Aer Lingus, and Vueling, as well as Star Alliance member Lufthansa.
Depending on the outcomes of the aforementioned sales, the European aviation landscape could look remarkably different in the next few years, which could also include a shakeup to the membership of major airline alliances.
On October 3, 2023, SAS announced the winning group of bidders for its restructuring. Air France-KLM, Castlelake, the Danish government, and Lind Invest have been selected as the parties that will bring SAS out of bankruptcy protection.
If the deal is approved, SAS will eventually leave Star Alliance, which it helped found, to join Air France-KLM in the SkyTeam alliance.
Assuming no further hindrances, the deal is expected to be finalized in the second quarter of 2024.