Air France-KLM to Take Majority Stake in Scandinavian Airline SAS
The Franco-Dutch airline group said on Friday it intended to increase its stake from 19.9% currently by acquiring the stakes held by top shareholders Castlelake and Lind Invest.
The purchase, subject to regulatory clearances, is expected to close in the second half of 2026, Reuters quoted Air France-KLM as saying.
The value of the investment would be determined at closing, based on SAS's latest financial performance, including core earnings (EBITDA) and net debt, the company said. It declined to give details on those metrics.
Air France-KLM expects to generate "three-digit million" euros in synergies from raising its SAS stake, Air France-KLM finance chief Steven Zaat told analysts on a call.
Zaat said the deal would be funded from cash or a "plain vanilla bond" and would not impact the drive to reduce the group's hybrid debt. "We have ample room for it," he said.
Air France-KLM shares were flat in early trading.
JPMorgan analysts said there were reasons to be positive about the deal.
"SAS offers deeper access to a GDP-rich region in Scandinavia, there will now be an opportunity to unlock cost synergies as SAS becomes a subsidiary of the group," they said in a note, adding that "industry consolidation should also be viewed positively for the whole sector, even if not game-changing in terms of size."
INDUSTRY CONSOLIDATION
SAS welcomed Air France-KLM's announcement.
"European consolidation had to happen further, and we're very happy to be part of that," SAS CEO Anko van der Werff told Danish broadcaster TV2.
"In the current setup where Air France-KLM is a 19.9% shareholder, they're still a competitor," he said. "With the new stake, going above 50%, we can really tap into all of those synergies and offer those benefits to customers."
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.
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 Air France-KLM CEO Ben Smith.
The deal comes as executives seek more consolidation in Europe's fragmented airline industry, which they say is needed to compete with US 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 privatize its national carrier TAP.
Lufthansa and Air France are also in talks about buying a stake in Spain's 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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Arabiya
2 hours ago
- Al Arabiya
Trump says Japan will invest $550 billion in US at his direction. It may not be a sure thing
President Donald Trump is bragging that Japan has given him, as part of a new trade framework, $550 billion to invest in the United States. It's an astonishing figure but still subject to negotiation and perhaps not the sure thing he's portraying. 'Japan is putting up $550 billion in order to lower their tariffs a little bit,' Trump said Thursday. 'They put up, as you could call it, seed money. Let's call it seed money.' He said 90 percent of any profits from the money invested would go to the US, even if Japan had put up the funds. 'It's not a loan or anything, it's a signing bonus,' the Republican president said on the trade framework that lowered his threatened tariff from 25 percent to 15 percent, including on autos. A White House official said the terms are being negotiated and nothing has been formalized in writing. The official, who insisted on anonymity to detail the terms of the talks, suggested the goal was for the $550 billion fund to make investments at Trump's direction. The sum is significant: It would represent more than 10 percent of Japan's entire gross domestic product. The Japan External Trade Organization estimates that direct investment into the US economy topped $780 billion in 2023. It is unclear the degree to which the $550 billion could represent new investment or flow into existing investment plans. What the trade framework announced Tuesday has achieved is a major talking point for the Trump administration. The president has claimed to have brought trillions of dollars in new investment into the US, though the impact of those commitments have yet to appear in the economic data for jobs, construction spending, or manufacturing output. The framework also enabled Trump to say other countries are agreeing to have their goods taxed, even if some of the cost of those taxes are ultimately passed along to US consumers. On the $550 billion, Japan's Cabinet Office said it involves the credit facility of state-affiliated financial institutions such as Japan Bank for International Cooperation. Further details would be decided based on the progress of the investment deals. Japanese trade negotiator Ryosei Akazawa, upon returning to Japan, did not discuss the terms of the $550 billion investment. Akazawa said he believes a written joint statement is necessary, at least on working levels, to avoid differences. He is not thinking about a legally binding trade pact. The US apparently released its version of the deal while Japanese officials were on their return flight home. 'If we find differences of understanding, we may have to point them out and say that's not what we discussed,' Akazawa said. The US administration said the fund would be invested in critical minerals, pharmaceuticals, computer chips, and shipbuilding, among other industries. It has said Japan will also buy 100 airplanes from Boeing and rice from US farmers as part of the framework, which Treasury Secretary Scott Bessent said would be evaluated every three months. 'And if the president is unhappy, then they will boomerang back to the 25 percent tariff rates, both on cars and the rest of their products. And I can tell you that I think at 25, especially in cars, the Japanese economy doesn't work,' Bessent told Fox News' 'The Ingraham Angle.' Akazawa denied that Bessent's quarterly review was part of the negotiations. 'In my past eight trips to the United States, during which I held talks with the president and the ministers,' Akazawa said, 'I have no recollection of discussing how we ensure the implementation of the latest agreement between Japan and the United States.' He said it would cause major disruptions to the economy and administrative processes if the rates first rise to 25 percent, as scheduled on August 1, and then drop to 15 percent. 'We definitely want to avoid that, and I believe that is the understanding shared by the US side,' he said. On buying US rice, Japanese officials have said they have no plans to raise the current 770,000-ton minimum access cap to import more from America. Agricultural Minister Shinjiro Koizumi said Japan will decide whether to increase US rice imports and that Japan is not committed to a fixed quota. Trump's commerce secretary, Howard Lutnick, has suggested that the Japanese agreement is putting pressure on other countries, such as South Korea, to strike deals with the US. Trump, who is traveling in Scotland, plans to meet on Sunday with European Commission President Ursula von der Leyen to discuss trade. 'Whatever Donald Trump wants to build, the Japanese will finance it for him,' Lutnick said Thursday on CNBC. 'Pretty amazing.'
Arab News
15 hours ago
- Arab News
Pakistan's Air Karachi in talks with Chinese jetmaker for aircraft as it gears up for operations
KARACHI: Air Karachi, Pakistan's new private airline in the making, has engaged the Commercial Aircraft Corporation of China (COMAC) for the supply of airliners to start its flight operations, the group chairman Hanif Gohar told Arab News on Friday. Spearheaded by a group of leading businessmen from Pakistan's southern port city, the airline is also negotiating with global aerospace giants like Boeing and Airbus for the acquisition of at least three passenger aircraft. It was launched in November 2024 by 100 stakeholders with Rs5 billion ($17.6 million) in seed money. 'We are talking with COMAC regarding the 919, as well as with Boeing and Airbus, to acquire the aircraft,' Gohar said, referring to a narrow-body passenger jet developed by China. Business leaders in the South Asian nation have stepped up to fill the gap as the state-run Pakistan International Airlines (PIA) has become a liability for the cash-strapped government, which is now making a second attempt to privatize the national carrier. 'We will start our flight operations as soon as we reach an agreement with any of the suppliers, whoever comes first,' Gohar said when asked about the timeline to start operations. Gohar, a business tycoon himself, expects a deal within the next month. He said Air Karachi would initially fly three aircraft domestically, and the fleet would later be expanded with four more planes to start international flights within a year. The idea to launch a business-backed airline was conceived to develop an entity that can operate with efficiency and financial autonomy amid growing challenges faced by PIA. Last month, Air Karachi received its Regular Public Transport (RPT) license from Pakistan's Civil Aviation Authority. The airline has been modeled after the success of Air Sial, another private carrier launched by industrialists in Sialkot, the manufacturing hub of Pakistan's exportable sports and surgical goods.
Arab News
a day ago
- Arab News
Pakistan president invites Saudi investment, praises Riyadh's support in critical times
KARACHI: President Asif Ali Zardari on Friday invited Saudi businesses to explore investment opportunities in Pakistan, underscoring the historic relationship between the two countries and Riyadh's critical role in helping Islamabad through difficult times. Zardari's remarks come as Pakistan looks to attract foreign investment to strengthen its economy. Saudi Arabia played a key role in stabilizing Pakistan's finances in recent years, depositing $2 billion into Pakistan's central bank in June 2023 to bolster foreign reserves. The Kingdom also helped unlock a $3 billion loan from the International Monetary Fund later in the same year. 'Pakistan and Saudi Arabia enjoy deep-rooted and historic relations based on shared faith and mutual trust,' the president said during a meeting with Saudi Ambassador Nawaf bin Said Al-Malki in Islamabad according to a statement circulated by the presidency. 'We invite Saudi investors to explore investment opportunities in various sectors of the Pakistani economy.' The Saudi financial assistance to Pakistan two years ago came as the South Asian nation's reserves had dropped to a level where it could barely cover a few weeks of imports, bringing the country to the brink of sovereign default. Zardari expressed appreciation for Riyadh's continued support during the meeting and called for deeper engagement between the two nations on regional and international forums. Pakistan has been trying to further strengthen its economic relations with the Gulf countries amid improving macroeconomic indicators. It also signed 34 memorandums of understanding worth $2.8 billion with Saudi Arabia in October 2024, part of Islamabad's broader push to accelerate its economic recovery through export-led growth and foreign investment.
