Air France-KLM Aims for Majority Stake in Scandinavian Airline SAS
Air France-KLM plans to increase its stake in SAS to 60.5% in a strategic move to enhance market position.
Key Points
- • Air France-KLM intends to raise its ownership in SAS from 20% to 60.5%.
- • The acquisition involves purchasing shares from Castlelake and Lind Invest, expected to finalize by mid-2026.
- • SAS will retain its 26.4% government stake, while Air France-KLM will dominate board control.
- • Analysts view this deal positively due to potential synergies and SAS's financial recovery.
Air France-KLM has announced its ambitious plan to increase its ownership stake in Scandinavian Airlines System (SAS) from approximately 20% to 60.5%, declared on July 4, 2023. This strategic acquisition marks a significant move for Air France-KLM in its efforts to strengthen its position in the competitive European airline market, particularly against rivals like IAG and Lufthansa.
The acquisition will be executed by purchasing shares from current stakeholders Castlelake and Lind Invest, with the transaction slated for completion by the second half of 2026, dependent on regulatory approvals. While the Danish government will retain a 26.4% stake in SAS and continue to hold seats on the board, Air France-KLM will control the majority of board positions, further consolidating its operational voice within the airline.
Analysts from JPMorgan view the acquisition positively, highlighting anticipated cost synergies and improved access to the Scandinavian market, especially following SAS's successful financial restructuring in 2024. SAS reported revenues of €4.1 billion that year, serving approximately 25 million passengers, compared to Air France-KLM's revenues of €31.5 billion with a passenger count of 98 million, despite its profits decreasing compared to previous years.
Benjamin Smith, CEO of Air France-KLM, expressed confidence in the prospects of SAS as it integrates into the larger Air France-KLM framework. He underscored the strategic importance of this acquisition not only for boosting market competitiveness but also for enhancing synergies in operations and loyalty programs. The initiative aligns with Air France-KLM’s broader strategy to potentially expand its portfolio by targeting other airlines, including Portuguese carrier TAP, to establish a stronger network in South America.
Despite this potentially transformative step, Air France-KLM's stock saw a slight post-announcement dip of 0.20%, settling at €9.87. The company remains focused on reaching operational targets for 2025, aiming for a 4% to 5% increase in flight capacity while managing cost controls.