Air France-KLM Group Acquire 19.9% Stake in SAS

The Air France-KLM Group on Wednesday announced that it has successfully completed the acquisition of a 19.9% non-controlling stake in the share capital of the Scandinavian airlines SAS AB following the receipt of regulatory approvals in Europe and the US.

In parallel to the financial transaction and as previously announced, Air France-KLM and SAS have signed far-reaching interline and codeshare agreements to connect their hubs and networks in July this year.

These agreements, which cover reciprocal loyalty program benefits, will enter into force as early as 1 September 2024. On the same day, SAS will join the Skyteam alliance, of which Air France and KLM are founding members.

Air France-KLM Group CEO Benjamin Smith said that they were pleased to have completed this strategic transaction and SAS will enhance the Group’s footprint in the Scandinavian markets.

“SAS, Air France and KLM customers will now have a larger number of destinations via codeshares. Skyteam will immediately gain a new strategic member,” he added.

This transaction was concluded by the Air France-KLM Group as part of a consortium of investors which also includes Castlelake L.P. on behalf of certain funds or affiliates, Lind Invest ApS, and the Danish State.

The members of the consortium now effectively hold an aggregate 86.4% stake in the share capital of the reorganized SAS AB (exclusive of the recovery by the Danish State in its capacity as a creditor of SAS and pursuant to SAS’s restructuring plans), having invested $1.2 billion in the company, by subscribing for $475 million of common shares and by purchasing $725 million of senior secured convertible notes.

The Air France-KLM Group itself invested a total of $144.5 million in SAS AB, by subscribing for $109.5 million of common shares and by purchasing $35 million of senior secured convertible notes, the Group said in a regulatory filing.

Specific provisions have been agreed upon between the members of the consortium, whereby Air France-KLM’s stake could be increased such that Air France-KLM may become a controlling shareholder, after a minimum of two years, subject to among other things, certain regulatory conditions and financial performance.

This investment is a component of Air France-KLM’s strategic roadmap. It was already considered in the Group’s financial trajectory for the year 2024 and has no impact on its medium-term outlook, the Group said.

Q2 Performance

In the second quarter of 2024, Air France-KLM welcomed 25.7 million passengers which was 4.4% above last year. As capacity increased by 4.1% and traffic grew by 4.1%, the load factor was stable compared to last year at 88%.

The Group passenger unit revenue per ASK was up +0.2% at constant currency compared to last year, despite less international inbound traffic to Paris as a consequence of the Olympic Games.

The operating result was $244.94 million below last year standing at $571.16 million and was mainly impacted by an increase of the ex-fuel unit costs ($121.36 million), an increase of unit fuel & ETS costs ($81.28 million) and a decrease of cargo unit revenues ($23.38 million).