Air France-KLM is set to take a stake in SAS in what the Scandinavian airline calls “a major milestone in its chapter 11 reorganisation.”
The Scandinavian carrier voluntarily filed for chapter 11 last July and the shake up will now see a consortium which includes investment manager Castlelake, Lind Invest, Air France-KLM and the Danish government set to take control of the airline.
Ryanair CEO Michael O’Leary predicts that European aviation will follow the American pattern of consolidation until there are only four carriers left, Lufthansa, Air France, IAG and Ryanair.
Air France-KLM will hold approximately 19.9pc under the new structure, which is subject to approval from regulatory authorities and creditors, with the option to take a controlling stake after two years.
As part of the transaction, SAS will leave Star Alliance and join SkyTeam, of which Air France-KLM is a founding member. A timeline for this switch has yet to be announced.
SAS will continue to operate and serve its customers as usual throughout the implementation of the transaction, which is likely to entail a filing by the listed parent company for the SAS group (SAS AB) for a company reorganisation in Sweden in 2024.
Carsten Dilling, chairman of the board of SAS, said: “This is a significant achievement of our transformation plan, SAS FORWARD. We have carried out a broad, competitive and thoroughly evaluated equity solicitation process, and we are confident that the selected bid is the most favourable for SAS, its creditors and other stakeholders.
“Securing new capital is one of the key pillars in the SAS FORWARD plan and will provide a strong financial foundation to help drive our airline forward and facilitate our emergence from the US chapter 11 process. While there is still work remaining, I am pleased to see the great progress we are making to be a competitive and financially strong company.”
Scandinavian customers will eventually benefit through the reorganisation as passengers will enjoy greater connectivity with Air France-KLM and its routes.
Benjamin Smith, CEO of Air France-KLM, said: “We are pleased to be part of the winning bidding consortium selected by the board of SAS. Air France-KLM looks forward to establishing strong commercial ties with SAS.
“This cooperation will allow Air France-KLM to enhance its position in the Nordics and improve connectivity for Scandinavian and European travellers. We look forward to being a part of this new chapter in SAS’ history and thank the board of SAS for their trust.”
Watch: Michael O’Leary Two or three years will see consolidation in European aviation
