AF-KLM Eyes SAS Boost, Bids for Air Europa

Air France-KLM is making strategic moves to expand its influence in the European aviation market by increasing its existing holding in SAS Scandinavian Airlines and pursuing a controlling stake in Air Europa. The Franco-Dutch airline group currently holds a 19.9% share in SAS, a position it is eager to expand as the carrier meets key benchmarks, including deeper integration into the SkyTeam alliance—a network in which Air France-KLM is also a member. CEO Ben Smith confirmed that the group is engaged in advanced talks with SAS regarding a stake increase. Under the current agreement signed when acquiring its minority share in June 2024, Air France-KLM retains the option to become the majority shareholder by late 2026.

During an investors’ call in March 2024, Smith emphasized that discussions with SAS were progressing well, underlining the group’s commitment to deepening its relationship with the Scandinavian carrier. However, SAS CEO Anko van der Werff noted that the airline would consider launching an initial public offering to fund its growth if Air France-KLM ultimately decided not to exercise its option. This possibility highlights the careful balancing act SAS faces as it navigates its need for capital while maintaining strategic partnerships. The prospect of an IPO underscores the airline’s ambition to secure additional funding while keeping its long-term strategic options open.

At the same time, Ben Smith revealed that Air France-KLM had held meetings with representatives from Air Europa in early March, lending further credibility to reports that the carrier is mulling an investment in the Spanish airline. Air Europa, based in Palma de Mallorca, has attracted significant interest from various investors. In addition to the potential investment from Air France-KLM, there have been offers from Lufthansa Group, which is reportedly looking to acquire a 25% stake, and bids from China’s Hainan Airlines, unnamed Middle Eastern funds, and IAG International Airlines Group. IAG had to abandon its bid in August 2024 due to concerns that a merger would conflict with European Commission competition regulations.

These developments underscore the increasingly competitive landscape in the European aviation sector, where strategic partnerships and equity investments are critical to overcoming market challenges and enhancing operational capabilities. Air France-KLM’s dual approach—aiming to boost its share in SAS while targeting a controlling stake in Air Europa—illustrates its ambition to consolidate influence across key markets. By deepening its engagement with SAS, the group hopes to achieve greater operational synergy and more effective network integration across its portfolio. In parallel, an investment in Air Europa would allow the carrier to capture new opportunities in the Spanish market and beyond, further diversifying its revenue streams and enhancing customer connectivity.

While neither Air France-KLM, SAS, nor Air Europa has yet commented officially on these reports, the unfolding discussions signal significant strategic realignments in the European airline industry. As talks continue in the coming months, industry observers will be watching closely to see whether these potential investments will materialize and how they might reshape the competitive dynamics among European carriers.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com