Friday, July 4, 2025
In the most recent evolution of the European airlines market, Air France-KLM has revealed its plans to increase its ownership of Scandinavian Airlines (SAS) from the present 19.9% up to 60.5%. This acquisition will be the most significant measure taken by Air France-KLM as part of its plans to further integrate SAS into its organizational system with the aim of increasing synergy and enhancing its presence in Scandinavia. Air France-KLM aims to acquire the shares of investors Castlelake and Lind Invest in the airline. This acquisition will be finalized by the second half of 2026 and will be conditional upon the approval of the regulatory bodies and the fulfillment of various conditions.
This transaction follows Air France-KLM’s initial entry into SAS in the summer of 2024. After SAS experienced significant financial distress due to the Covid-19 pandemic, Air France-KLM stepped in with an initial stake in the airline. That move was part of a broader strategy to form a commercial partnership that included extended code-share agreements and distribution arrangements. Furthermore, SAS’s inclusion in the SkyTeam alliance, which both Air France and KLM are members of, further solidified the relationship between the two companies.
SAS, which had previously filed for bankruptcy under Chapter 11 in 2024, was seeking ways to return to profitability. The partnership with Air France-KLM has been an essential element of its restructuring plan. Over the past year, SAS has shown a marked improvement in its financial health, as evidenced by its recovery trajectory. The airline reported revenue of €4.1 billion in 2024 and successfully carried over 25 million passengers, signaling its resurgence after a challenging period.
Anko van der Werff, the CEO of Air France-KLM, expressed confidence in the acquisition’s potential, citing it as a reflection of the positive results stemming from the collaboration with SAS. He highlighted that the majority stake would allow Air France-KLM to deepen its industrial integration with the Scandinavian carrier, which would ultimately improve operational efficiency, customer experience, and profitability. With SAS now fully aligned with Air France-KLM’s strategic objectives, both carriers anticipate realizing greater synergies in areas such as frequent flyer programs, joint purchasing agreements, and shared resources across their networks.
The Danish government, which has a significant stake in SAS, will continue to play a role in the airline’s governance. The government’s 26.4% stake will remain intact, and it will maintain its representation on SAS’s board of directors. This ensures that Denmark’s interests are preserved, even as Air France-KLM takes control of the majority of shares. The Danish government has been instrumental in ensuring the stability of SAS during its restructuring process, and it will likely continue to support the airline’s recovery in the coming years.
For Air France-KLM, this acquisition is part of a broader trend of consolidation in the European airline industry. With rising competition from low-cost carriers and growing pressure from global aviation giants, European airlines are increasingly seeking to combine resources to better compete. This merger represents a strategic alignment that will provide the airline group with increased operational flexibility and a larger footprint in the European market.
One of the main anticipated benefits of the acquisition is the operational synergies that will be realized across the two carriers. By integrating SAS into its network, Air France-KLM expects to streamline operations and improve customer offerings. For instance, SAS customers will gain more access to Air France-KLM’s extensive network of destinations, while Air France-KLM passengers will benefit from enhanced connectivity through SAS’s Scandinavian hubs. Additionally, both carriers will be able to share resources such as ground services, flight scheduling, and maintenance operations, all of which should contribute to cost reductions and improved efficiency.
Furthermore, the deal could result in the expansion of frequent flyer programs, offering customers more opportunities to earn and redeem miles on both airlines. This could attract more business travelers, who often value loyalty benefits. In addition, the integration of SAS’s network will provide passengers with increased flight options, particularly to Scandinavian countries and other regional destinations.
Despite the promising outlook, the transaction remains subject to regulatory approval, as authorities will need to ensure that the acquisition does not violate competition laws or lead to unfair market practices. Given the size and scope of the deal, it will likely undergo careful scrutiny by regulators in both the European Union and the countries where Air France-KLM and SAS operate. However, Air France-KLM has expressed confidence that it will meet the regulatory requirements and secure approval for the deal.
The final purchase price for the acquisition will be determined based on SAS’s financial performance at the time of closing. Key financial indicators, such as earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as net debt, will play a significant role in the valuation of the airline. This means that the precise cost of the deal will not be known until the transaction is closer to completion in 2026.
Should the acquisition go through, SAS will become a subsidiary of Air France-KLM. The integration of SAS into the Air France-KLM family is expected to generate significant operational efficiencies and bolster the group’s position within the highly competitive European aviation market. Analysts believe that this move positions Air France-KLM to continue expanding its dominance in the region, especially as the airline industry recovers from the effects of the pandemic.
Lastly, Air France-KLM’s majority acquisition of SAS is a strategic reinforcement of its presence in Scandinavia and beyond. The purchase is as much the sign of the success of the existing cooperation between the two airlines as the broader trend of consolidation in the European airlines sector. Successful as it would be, the purchase will provide Air France-KLM with the benefit of having greater operational synergies and improved competitiveness in the rapidly changing world of flight.
Sources:
- Air France-KLM Newsroom
- SAS Group Newsroom
- Reuters
- Euronews
- GlobeNewswire
- The Edge Malaysia
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