Keep knowledgeable with free updates
Merely signal as much as the Airways myFT Digest — delivered on to your inbox.
Air France-KLM will take a majority stake in Scandinavian Airways, hoping what it calls a “simple” deal will keep away from the antitrust pushback from Brussels that has met latest makes an attempt at European airline consolidation.
The corporate mentioned on Friday that it might enhance its stake in SAS, the nationwide airline of Denmark, Sweden and Norway, from 19.9 to 60.5 per cent.
The monetary phrases of the deal weren’t disclosed, however the stake is anticipated to be valued extra extremely than the $145mn Air France-KLM paid for an nearly 20 per cent stake in 2023, as a part of a restructuring of the then troubled provider.
Ben Smith, chief government of Air France-KLM, mentioned: “The administration workforce has carried out a incredible job at exceeding the marketing strategy. It’s going to be a win-win for our funding to justify an elevated value.”
He added that the deal would permit Air France-KLM to ship synergies, together with by way of potential job cuts, and enhance the group’s long-haul provide.
Air France-KLM expects the deal to shut within the second half of 2026. It’s prone to face scrutiny from the European Fee, which has expressed concern that airline takeovers might result in greater fares.
Smith mentioned: “We’re hopeful that that is simple and it doesn’t take the identical size of time [as other deals].” He urged that prime competitors in Scandinavia from Norwegian Air meant the acquisition wouldn’t give Air France-KLM a dominant place out there.
Ryanair has up to now made a number of bids to purchase Irish rival Aer Lingus, whereas IAG, the proprietor of British Airways, dropped plans to purchase Spain’s Air Europa over necessities from competitors regulators.
Paris and Berlin have beforehand known as on the fee to do extra to allow mergers in each the airline and telecoms industries, as Europe seeks to construct regional champions able to taking up bigger rivals from international locations corresponding to China and the US.
Air France-KLM will enhance its possession of SAS by shopping for out the stakes of personal fairness group Castlelake and Lind Make investments, the household workplace owned by Swedish billionaire Henrik Lind. The Danish state will retain its 26.4 per cent stake and stay on the corporate’s board.
Smith mentioned that the transfer would allow it to develop within the Scandinavian market, together with linking into KLM’s long-haul community from Amsterdam.
Older carriers corresponding to Air France-KLM have confronted stiff competitors from price range airways in recent times. However Smith mentioned he was assured that the development of leisure travellers selecting premium seats would proceed, pointing to the expansion of premium visitors within the US.
SAS had struggled with excessive prices and weak profitability and was hit by the collapse of worldwide journey throughout the pandemic. In 2023, SAS worn out present shareholders together with the Swedish authorities, in a restructuring that delisted the corporate and led to Air France-KLM and Castlelake turning into new buyers alongside the Danish state.
Air France-KLM has additionally expressed an curiosity in buying Portuguese airline TAP, which was put up on the market by the Portuguese authorities. It faces competitors for this deal from Lufthansa and IAG.
Smith mentioned taking majority management of SAS wouldn’t have an effect on Air France-KLM’s ambitions to purchase TAP.
