UPDATE 2-Air France-KLM to take majority stake in Scandinavian airline SAS

Air France-KLM plans to increase its stake in Scandinavian airline SAS to 60.5%, the latest step towards consolidating Europe's fragmented airline sector as carriers seek to strengthen their position against rivals. The French airline group said on Friday it intended to increase its stake from 19.9% currently by acquiring the stakes held by top shareholder Castlelake and Lind Invest.

The purchase, subject to regulatory clearances, is expected to close in the second half of 2026, Air France-KLM said. The value of the investment would be determined at closing, based on SAS's latest financial performance, including core earnings (EBITDA) and net debt, added the company.

The Scandinavian airline welcomed the announcement, calling it a "defining moment" that marked Air France-KLM's commitment to strengthen SAS. "It brings not just stability but will also allow for deeper industrial integration and the full backing of one of the world's leading airline groups," SAS CEO Anko van der Werff said.

"Together, we will be better positioned to deliver greater value to our customers, our colleagues, and the wider region." SAS said it would continue to invest in its fleet and network.

In 2023, Air France-KLM said it would invest about $144.5 million for its initial SAS stake, boosting its presence in Sweden, Denmark and Norway with the option to become a controlling shareholder after a minimum of two years, subject to conditions. SAS exited from Chapter 11 bankruptcy protection in August last year.

Air France-KLM CEO Ben Smith told Reuters in March that the company was looking to raise its stake in SAS, as the carrier was meeting the necessary milestones, including integration into the SkyTeam airline alliance, of which Air France-KLM is also a member. The two carriers have already had a commercial cooperation since summer 2024. Control of SAS would allow Air France-KLM to expand in the Scandinavian market and create additional value for shareholders, Air France-KLM said in a statement.

"Following their successful restructuring, SAS has delivered impressive performance, and we are confident that the airline's potential will continue to grow through deeper integration within the Air France-KLM Group," said Smith. The deal comes as executives seek more consolidation in Europe's fragmented airline industry, which they say is needed to compete with U.S. and Middle Eastern rivals.

Earlier this year, Germany's Lufthansa bought a 41% stake in Italy's ITA Airways and a stake in Air Baltic. The Portuguese government is looking to privatise its national carrier TAP Lufthansa and Air France are also in talks about buying a stake in Spanish airline Air Europa.

SAS has 138 aircraft in service and carried more than 25 million passengers last year, generating revenues of 4.1 billion euros ($4.8 billion). Air France-KLM group would have a majority of seats on the board of directors, while the Danish state will keep its 26.4% stake in SAS and its seats on the board.

($1 = 0.8488 euros)

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