[News] October 3, 2023, 3:26 pm ET. By Filip Kopeć.
A major equity investment will align the carrier with Air France-KLM
In July of last year, SAS Scandinavian Airlines entered court-supervised Chapter 11 bankruptcy proceedings. The well-established process left the airline operating almost as usual, handling the union crisis with the pilots. After more than a year, the company resurfaces with groundbreaking news. It has selected the winning bidder for a major investment in the company that is supposed to take it out of its troubled position. The company announced the changes in a press release late Tuesday.
SAS selected U.S. investment firm Castlelake and Air France-KLM along with the Danish state to collectively take a majority stake in the carrier. Castlelake is said to take 32% holding of the company with Air France-KLM holding 20%. The total equity transaction in the reorganized SAS will correspond to $1.18 million (SEK 12.925 billion) including $475 million (SEK 5.225 billion) in newly issued equity shares and $700 million (SEK 7.7 billion) in secured convertible debt. Additionally, Castlelake will refinance $500 million (SEK 5.5 billion) of the outstanding debt burdening the company.
Significant implications of that investment will change the competitive landscape of Europe. As a part of the transaction SAS will exit the Star Alliance, subject to any relevant approvals and join the SkyTeam Alliance, one Air France is a founding member of.
This development comes in as the third major consolidation move happening this year. Earlier this year, after battling through the pandemic and fighting off antitrust concerns, International Airlines Group, the parent company of British Airways and Iberia, announced it had finalized the Air Europa takeover that began in 2019. Following that, the multiyear uncertainty period that Alitalia went through has been finally put to rest. In another one of the big transactions, Lufthansa…