One of the founding members of the Star Alliance has announced plans to defect to SkyTeam, following a restructuring which will see Air France-KLM take a stake in the Scandinavian carrier.
SAS confirmed that it had reached “a major milestone” in its Chapter 11 process in the US, with a consortium including investment manager Castlelake, Lind Invest, Air France-KLM and the Danish government set to take control of the airline.
Under the new structure – which is subject to approval from regulatory authorities and creditors – Air France-KLM will hold approximately 19.9 per cent of the equity, with the option to take a controlling stake after two years.
This will result in the carrier “eventually” joining the SkyTeam alliance, of which Air France is a founding member.
Ahead of this SAS said it would “seek to establish a commercial cooperation with Air France-KLM and its airlines (subject to customary approvals), to the benefit of Scandinavian customers through increased connectivity”.
SAS faced unprecedented challenges as a result of the Covid-19 pandemic, and in 2020 the EU Commission approved €1 billion in state aid measures by Denmark and Sweden (Norway sold its remaining stake in SAS in 2018), as part of recapitalisation plans which the airline said were required to enable it “to continue its operations and its sustainability agenda”.
The restructure – which is expected to be implemented during 2024 – will see the consortium invest a total of $1.175 billion into the carrier, including $475 million in new unlisted equity and $700 million in secured convertible debt.
Castlelake – which will also provide a $500 million loan to SAS – will hold around 32 per cent of the equity, with the Danish state holding 25.8 per cent, Air France-KLM holding 19.9 per cent, and Lind Invest holding 8.6 per cent.
The remaining 13.6 per cent equity “is most likely to be distributed among and held by certain creditors who may receive recovery in equity”.
Commenting on the news Anko van der Werff, president and chief executive officer of SAS, said:
“The agreed investment is a key milestone in our SAS FORWARD plan, and it shows that our new investors believe in SAS and our potential to remain at the forefront of the airline industry for years to come.
“Further, our move towards a partnership with SkyTeam determines a clear path forward for the company. Through the completion of this process and the opportunities presented by being part of SkyTeam, we will be able to further enhance SAS’ offerings for the benefit of our colleagues, customers and communities. We look forward to building a bright future for SAS together.”