EUROPE- In October 2023, Scandinavian Airlines (SAS) revealed plans to receive investments from Air France (AF)–KLM (KL) and depart from the Star Alliance to join SkyTeam.
While the initial announcement lacked details about the timeline, recent developments provide a clearer picture, and the transition is imminent.
SAS to Join SkyTeam
In July 2022, SAS filed for Chapter 11 bankruptcy protection, facing financial challenges exacerbated by the pandemic, high operational costs, and intense competition.
Despite initial intentions to emerge from bankruptcy within a year by implementing significant cost-cutting measures, the process proved more complex.
Subsequently, a more comprehensive strategy was unveiled, involving new investments for SAS, including a $1.16 billion infusion. This restructuring will see US investment firm Castlelake holding a 32% stake, Air France-KLM with a 20% stake, and the Danish state owning a 26% stake. The possibility of Air France-KLM increasing its ownership share in the future has also been indicated.
The current schedule indicates that Scandinavian Airlines (SAS) is set to conclude its Chapter 11 bankruptcy protection process by the latter part of the second quarter in 2024, roughly around June.
With Air France-KLM’s investment in SAS, significant changes are anticipated for the airline and its passengers. SAS, a founding member of the Star Alliance, will depart from this alliance and shift its affiliation to the SkyTeam alliance.
Although an exact date is yet to be confirmed, this transition is expected to occur in the second quarter of 2024, potentially between April and June.
Regulatory Approval Can Cause Delays
As part of the strategic shift, SAS aims to join the SkyTeam transatlantic joint venture alongside Air France-KLM, Delta (DL), and Virgin Atlantic (VS).
Approval from government authorities will be required for this move, introducing a potential delay beyond the initial SkyTeam alliance integration, possibly spanning several months.
It is noteworthy that SAS is currently not involved in the Star Alliance transatlantic joint venture, which features United, Air Canada, Lufthansa, SWISS, Austrian, and Brussels. This adjustment to a transatlantic joint venture within SkyTeam could empower SAS to command more competitive fares, enhancing its positioning in the aviation landscape.
The realignment is a substantial strategic gain for Air France-KLM and SkyTeam, providing enhanced connectivity with a hub in Northern Europe. Simultaneously, it represents a notable setback for the Star Alliance due to the departure of SAS.
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