Air France-KLM begins efforts to gain majority control of SAS.

KLM BOEING 777-306 PH-BVA (MSN 35671)

Air France-KLM will initiate the process of raising its minority stake in Scandinavian airline SAS to 60.5%, as it looks to extend consolidation in European aviation and better compete with rivals Deutsche Lufthansa. The carrier group, which owns nearly 20% now, will acquire the stakes held by Castlelake LP and Lind Invest for an amount that will be determined by SAS’s financial performance at closing, Air France-KLM said in a statement. The Danish government will continue to hold 26.4% in SAS and retains its board seats, according to the statement.

“We are confident that the airline’s potential will continue to grow through deeper integration within the Air France-KLM Group,” Ben Smith, the chief executive officer of Air France-KLM, said in the statement.

Europe’s airline industry has been consolidating in the aftermath of the pandemic, with Lufthansa taking a 41% share of Italy’s ITA Airways, as well as a stake in Latvia’s AirBaltic, while the Portuguese government is seeking a new owner for state-owned TAP SA. Air France-KLM said its rationale for increasing its stake in SAS was the “significant improvement” in the airline’s financial and operational performance.

Air France-KLM first announced in 2023 that it would invest up to $144.5 million for as much as a 19.9% of SAS, with the option to take a controlling interest after two years under certain conditions. It took the initial stake while SAS went through a two-year reorganization process after filing for Chapter 11 bankruptcy protection.

SAS has a fleet of 138 aircraft, and flies to over 130 destinations. The airline announced this week that it’s buying additional planes from Embraer SA to expand its regional network. The Scandinavian carrier has previously endorsed Air France-KLM’s possible increase in ownership, saying that being part of a larger group would help SAS tap into a larger network. SAS offers a strong Nordic market position with attractive landing slots and about 8 million loyalty-card members — assets that are valuable to Air France-KLM as it strengthens its European network.