Alliance shocker: SAS to tie up with Air France-KLM and SkyTeam, ditch Star Alliance

03.10.2023 - 19:57 / thepointsguy.com / Star

Scandinavian Airlines plans to leave the Star Alliance frequent flyer group it helped found more than 25 years ago.

Instead, SAS intends to move to the SkyTeam alliance as part of a new tie-up with Air France-KLM. The move, which still must win regulatory and shareholder approvals, comes after Air France-KLM won a bid to provide exit financing for SAS to emerge from Chapter 11 bankruptcy protection.

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"This is an important day for SAS and for Air France-KLM. We are pleased to be part of the winning bidding consortium selected by the board of SAS," Air France-KLM CEO Benjamin Smith said in a statement.

"With its well-established position in Scandinavia and strong brand, SAS offers tremendous potential to Air France-KLM," he added. "This cooperation will allow Air France-KLM to enhance its position in the Nordics and improve connectivity for Scandinavian and European travelers. We look forward to being a part of this new chapter in SAS' history and thank the board of SAS for their trust."

If approved, the deal would give Air France-KLM a noncontrolling 19.99% stake in SAS. While that stops short of being a full takeover, it comes amid a broader wave of consolidation in the European airline industry.

Most recently, Germany's Lufthansa Group won a deal for a 41% stake in ITA Airways — the Italian carrier that rose from the ashes of perennial loss-maker Alitalia.

Next up could be Portuguese carrier TAP Air Portugal, which was just put up for sale as the government seeks to privatize the state-owned airline. That's sparked speculation about who could emerge as a potential buyer, with Lufthansa Group, Air France-KLM and International Airlines Group all seen as possibilities. IAG is already the parent company of several airlines, including British Airways and Spanish brand Iberia.

As for Air France-KLM's stake, SAS said it would "continue to operate and serve its customers as usual throughout the implementation of the transaction," expected to come during the second quarter of 2024.

Few details were immediately shared, but it is likely that SAS would continue to operate under its own brand — just as Air France and KLM have done since those two carriers merged in 2004. However, the tie-up would allow Air France, KLM and SAS to coordinate their schedules across hubs in Paris, Amsterdam, Stockholm, Copenhagen and Oslo.

"In doing so Air France-KLM will strengthen its footprint in Scandinavian markets, where the SAS brand and loyalty program are well-established," Air France-KLM said in a statement. "Such commercial cooperation would benefit Scandinavian customers through extended connectivity and broader access to the worldwide