Wow, some significant changes are coming to Scandinavian Airlines (SAS)…
In this post:
SAS gets new shareholders, including Air France-KLM
In July 2022, SAS filed for Chapter 11 bankruptcy protection. The airline was in a rough financial situation, between the impacts of the pandemic, high costs, and the amount of competition the airline faced in many markets. While SAS intended to significantly cut costs and emerge from bankruptcy protection within a year, that didn’t prove to be so easy.
So there’s a major update, as SAS is now getting new investors, including airline group Air France-KLM. Specifically, investments in the reorganized airline will total $1.16 billion, and when all is said and done, US investment firm Castlelake will take a 32% stake, Air France-KLM will take a 20% stake, and the Danish state will take a 26% stake. It’s stated that Air France-KLM may look to increase its stake in the airline in the future.
This deal now needs approval from the bankruptcy court, and the hope is that the airline exits Chapter 11 bankruptcy protection in the second quarter of 2024.
SAS will leave Star Alliance and join SkyTeam
As you’d expect, Air France-KLM investing in SAS will have major implications for passengers at the airline. The intent is that SAS will leave the Star Alliance, of which it’s a founding member, and instead join the SkyTeam alliance.
Not only that, but the plan is for SAS to join the SkyTeam transatlantic joint venture, which includes Air France-KLM, Delta, and Virgin Atlantic. This will need government approval, so I’m curious if that faces any scrutiny from regulators.
While I think that both oneworld and Star Alliance are much better alliances than SkyTeam in terms of how seamlessly benefits are offered, I think this is probably pretty logical for SAS (even beyond the Air France-KLM investment).
Keep in mind that as it stands, SAS is not part of the Star Alliance transatlantic joint venture, which includes United, Air Canada, Lufthansa, SWISS, Austrian, and Brussels. So the airline has very much been treated as a second class member of Star Alliance. Being part of a transatlantic joint venture will allow SAS to potentially command higher fares, which the airline could use.
This is a huge win for Air France-KLM and SkyTeam in terms of connectivity, as the airline group will now have a hub in Northern Europe. In the same way, it’s also quite a loss for Star Alliance.
Bottom line
There are major changes coming to Scandinavian Airlines. The airline filed for bankruptcy protection in 2022, and is now getting new investors. Air France-KLM is taking a stake in the airline, and as part of that, SAS intends to leave Star Alliance and join SkyTeam.
While I consider SkyTeam to be the least useful alliance for frequent flyers (in terms of reciprocal opportunities), it seems like quite a win for SAS to join one of the “big three” transatlantic joint ventures, which it was excluded from at Star Alliance.
What do you make of these major changes at Scandinavian Airlines?
I'm in utter shock, a founding member of Star Alliance just jumps ship! In my opinion SkyTeam is the worst airline alliance in terms of airline quality and seamless travel benefits across the entire alliance. They just lack! Well, I guess if Air France-KLM was willing to help give SAS a financial boost then SAS has no choice but join SkyTeam. I wish it were the likes of Qatar Airways willing to give that financial...
I'm in utter shock, a founding member of Star Alliance just jumps ship! In my opinion SkyTeam is the worst airline alliance in terms of airline quality and seamless travel benefits across the entire alliance. They just lack! Well, I guess if Air France-KLM was willing to help give SAS a financial boost then SAS has no choice but join SkyTeam. I wish it were the likes of Qatar Airways willing to give that financial boost as then SAS would have to depart the world-class alliance of Star Alliance and join the other world-class airline alliance Oneworld, in my opinion.
I used to be an Air France-KLM frequent flyer Flying Blue member and after reading horror stories of how they lack in rewarding seamless frequent flyer benefit to their members, I had my account closed!
Shame SAS will be leaving Star Alliance!
alot of people fail to realize that SAS was deeply and negatively impacted by Norwegian which itself filed for bankruptcy and shrunk dramatically.
SAS was a victim of all that.
The US big 3 and their predecessors were all "victims" of the low cost carriers and their lower costs - until a couple years ago when the tables turned dramatically.
No carrier in bankruptcy has a great reputation for service.
SAS has...
alot of people fail to realize that SAS was deeply and negatively impacted by Norwegian which itself filed for bankruptcy and shrunk dramatically.
SAS was a victim of all that.
The US big 3 and their predecessors were all "victims" of the low cost carriers and their lower costs - until a couple years ago when the tables turned dramatically.
No carrier in bankruptcy has a great reputation for service.
SAS has great fixer-up potential. It just will play for Skyteam instead of Star now.
Alot of people don't want to admit that AirFrance/KLM and Skyteam made a better offer and the loss is Star's.
Let's see where TAP and LOT go. Their bargaining position just increased dramatically
A lot of nonsensical comments here like "it would have been better to let them go out of business". Oh please. The airline was seeking investors and an infusion of cash and new blood and it received that from AF/KLM. As a result, they will switch alliances to align with their new partial owner. Simple as that.
It's a rubbish airline and a terrible business - despite offering barebones service AND extremely high ticket prices, still can't make money. There would be no loss in the market to it disappearing. It will be loss making and a burden on AF/KLM.
Like ITA for LH? Lol
Yes lets reference a completely different airline that we're not talking about - its really not the gotcha you think lol
(Also FYI ITA actually do provide some semblance of a service, including decent lounges and an onboard service - it is not stellar but it is not Ryanair Rip-off like SAS)
This may be a good sign getting in with the JV. It will allow the airline to improve its product especially in Economy which has been... shall we say... lacking... If there is not much potential for growth from either CDG or AMS, then CPH is a good alternative but the product will have to be standardised... They have a good business and plus product but economy and the outer edges need improvement
Would have been better to let it go out of business. Appalling airline, on the level of Ryanair and Wizz Air, but at insane prices. Frequent flyer programme and lounges are a joke. No Scandinavians I know, and I know a lot including my best friend, likes it or has any kind of warm or sentimental feelings towards it as an airline.
I confess that I'm not an expert on the economics of airline alliances, but I've got to believe that Skyteam's cost of membership is much lower. That had to make the deal much more attractive for a bankrupt airline. Given they were the blonde haired stepchild of *A, they'll likely get much more return on that expense going forward.
Is it in response to probably the purchase of ITA by Lufthansa?
As a US resident and UA Mileage Plus member, SAS was frustrating. They bare seemed to have a relationship with UA and award travel was never offered. You couldn’t even buy an SAS ticket from UA. What kind of alliance is that?
My experience with the integration of AF/KLM, Virgin Atlantic and Delta have been very positive and relatively seamless.
Will United now fly to Copenhagen again since SAS is no longer in Star Alliance?
There will be a lot of fallout from this. Expect LH to fully bring ITA into the fold. As well to see some significant shifts in U.S routes for SAS. IAD will be dropped and EWR will move to JFK being the two significant changes. Not sure what the point to point traffic is for ORD, but if weak exit a shift as well to DTW or MSP.
MSP would presumably have a stronger O&D demand (plus lutefisk cargo!) to Scandinavia than DTW. Though DL might be willing to take on the hub-to-CPH routes and let SK keep O&D connectivity with IAD/ORD/SFO (possibly down gauged for lack of feed), depending on if UA decides to do their own CPH flights.
SK will remain on point-to-point routes, where there are larger Scandic populations
Cool, now I can spend 300k SkyPesos to fly one way to CPH!
490k SkyPesos in business class
On a 30 year old 767-300.
Although I’ve flown with SAS a couple of times, I always found them incredibly depressing, just the whole experience. From the cold flight attendants to the sad lounges. They pretend to be some kind of elite “Scandinavian airline”, but they are nothing more than a glorified easyjet.
This should actually be excellent news. SAS was pretty much an airline at the bottom of the barrel. On European flights there was no free water, food or...
Although I’ve flown with SAS a couple of times, I always found them incredibly depressing, just the whole experience. From the cold flight attendants to the sad lounges. They pretend to be some kind of elite “Scandinavian airline”, but they are nothing more than a glorified easyjet.
This should actually be excellent news. SAS was pretty much an airline at the bottom of the barrel. On European flights there was no free water, food or even hand luggage included with a ticket. Since they will become part of the AF/KL group, they probably want a similar experience across partners, it could drastically improve the service on board to be on par with AF/KL.
SAS is a bit boring so it should go with Delta.
Now they can not release award space to a different set of partners.
Also helps AF/KLM with the new AMS laws, now have CDG and CPH/OSL/ARN to route traffic through if needed
I wonder why SAS is joining Skyteam now that Air France acquired 20% of it, and LATAM never did when Delta acquired the same 20% a couple years ago.
Qatar has a 10% stake in LATAM. As long as they’re an investor, LATAM isn’t likely to join Skyteam.
There's also the matter of AR.
Plus the fact that Delta doesn’t care about the alliance?…
DL has more control of VS than they do of LA, yet VS joined SkyTeam.
This was totally unexpected for me, I was expecting SAS would stay independent. It’s a loss for Star Alliance, but is it a win for Skyteam? Let’s see what becomes of the airline. Flew SAS once a few years ago intra-Europe and it was a very nice experience but their schedule varied wildly from one day to another.
The thing is how exactly one positions SAS and what they are known for and why one...
This was totally unexpected for me, I was expecting SAS would stay independent. It’s a loss for Star Alliance, but is it a win for Skyteam? Let’s see what becomes of the airline. Flew SAS once a few years ago intra-Europe and it was a very nice experience but their schedule varied wildly from one day to another.
The thing is how exactly one positions SAS and what they are known for and why one would fly them outside of bringing people to and from Scandinavia. It’s not like Scandinavia has like ties with former colonies or is a “giant superconnector” or specializes in one specific geographical region outside of its home bases (which is less tourism-centric than other European countries). It’s also not known for being overly cheap and is midpack in terms of luxuriousness. And their long-haul fleet is relatively small.
I’m curious also as to how Air France-KLM will position the ARN/OSL/CPH hubs against AMS/CDG. I’m also not sure where Scandinavian air travel demand is centered around…
SAS traditionally earns its money on domestic flying in Norway, and flying its small but affluent home market on vacation.
This would seal the fate of planned HND-CPH service by ANA - announced but indefinitely postponed after COVID - would never be commenced.
ANA only serves Star Alliance hub in Europe except for London, Paris and Düsseldorf- where they can expect enough P2P traffic between Japan.
HND ARN, but kind of same same.
The problem is that the slots were assigned reciprocally, so ANA is not free to move the flight anywhere in Europe
Given that ST doesn't have a Japanese airline, it is still possible for SK and NH to cooperate. I am curious to see if KE restarts ICN-CPH though
My bad - thank you for correction.
This slot is awarded for HND - Scandinavia flights, so ANA can move to CPH or OSL if necessary.
Maybe CPH could do better?
I very much doubt ANA will fly the route anytime soon. ARN or CPH. Loosing the Star Alliance feed in Scandinavia is not going to help either, but the Russian airspace being unavailable is the main driver.
Makes me wonder if Star Alliance will court Icelandair to keep some Nordic connectivity?
Nordic connectivity with Icelandair? They don't serve that many Scandinavian destinations - basically just the major cities, which are already well covered by other *A carriers (LH Group and LO). No one's gonna fly Sofia to Oslo via Keflavik anyway.
The local airports in Scandinavia, where the SK's true value for *A network was, are lost.
Another Sweden (with SAS Diamond and millions of Eurobonus points) here. Terrible news. Just terrible. I’m almost in chock. The only real value in the current program is to redeem points for business class awards on select *A carriers, such as TK, BR, and LH. This will surely be missed. I really hope that the don’t gut the program, and that it will still be possible to find somewhat reasonably priced long-haul C awards on other SkyTeam carriers. A really sad day.
This is the crux of the matter:
SAS "has very much been treated as a second class member of Star Alliance. Being part of (the AF/DL/KL/VS) transatlantic joint venture will allow SAS to potentially command higher fares.
Given that AMS, CDG, and now CPH surround and are directly between Germany, Austria and Switzerland and the US, the LH Group is very vulnerable to having traffic picked off.
Whatever Skyteam lost with ITA is more...
This is the crux of the matter:
SAS "has very much been treated as a second class member of Star Alliance. Being part of (the AF/DL/KL/VS) transatlantic joint venture will allow SAS to potentially command higher fares.
Given that AMS, CDG, and now CPH surround and are directly between Germany, Austria and Switzerland and the US, the LH Group is very vulnerable to having traffic picked off.
Whatever Skyteam lost with ITA is more than offset with SAS.
Given that LOT and TAP are still in play, Star Alliance could be looking much less commanding in Europe
there's a reason SAS wasn't in the *Alliance JV. It's nice to see that Delta and Skyteam were that desperate to enter into SAS cost disaster to realize that. I guess after decades of SAS being independent and nothing changing, the dutch government made the DL JV decide to spend money on an extra runway for AMS at extra cost. you'd have to not know how map works to think SAS adds value vs LH...
there's a reason SAS wasn't in the *Alliance JV. It's nice to see that Delta and Skyteam were that desperate to enter into SAS cost disaster to realize that. I guess after decades of SAS being independent and nothing changing, the dutch government made the DL JV decide to spend money on an extra runway for AMS at extra cost. you'd have to not know how map works to think SAS adds value vs LH group.
There's literally nothing new about SAS in their current cost situation to change anything except AF/DL/KL desperation about AMS runways.
Funny. I think even I'd take ITA over SAS... but at least ITA has geographic value. you'd need to relook at a map think SAS does vs LH but Timmy never does... ;)
you do realize that SK just emerged from bankruptcy and cut its costs and this stock sale is part of the process?
None of that changes that AMS/CDG and CPH all surround the LH Group's primary markets.
If you actually read financial statements, SK did a far better job of getting its costs down than ITA - and Italy is simply not a very advantageous location for connections
Let's see where LOT and TAP end...
you do realize that SK just emerged from bankruptcy and cut its costs and this stock sale is part of the process?
None of that changes that AMS/CDG and CPH all surround the LH Group's primary markets.
If you actually read financial statements, SK did a far better job of getting its costs down than ITA - and Italy is simply not a very advantageous location for connections
Let's see where LOT and TAP end up but all of the chest beating about how great Star is might take a considerable backseat to some good French business strategy
Given that now all of the big 3 in Europe are in the process of acquiring airlines, wonder what this means for a potential TP acquisition. Could we see a surprise third party like U2 buy it out?
U2 is probably more focused on their residency at the Sphere.
@Nate nate
You think Bono doesn't need toilet paper in Vegas?
Just in case Bono has a boner.
@Nate nate
U2 is actually the airline code for the easyJet group. Wasn't talking about the band, though that would be *really* amusing to see
I think @Nate nate knows that, it was a joke, which I appreciate it much. Being both a fan of of the band and commercial aviation!
It's a smart move, but it seems awkward to have another Skyteam Hub so close to AMS. In any event, this hopefully brings the prospect of SAS serving MSP from Zero Chance to 10% :)
The Dutch government seems hell bend on getting Schiphol to be a net Zero contributer and basically close it.
So maby CPH will take over part of AMS business?
@Erik
What better plan to make AMS clean by polluting Greta's home instead.
A lot of people probably want to burn more jet fuel in ARN because of this.
Greta is from Sweden, not Denmark
SAS has been my go to airline between ORD and Italy for the past few years. Consistently the cheapest fares, sometimes by far (especially when compared to US airlines), when compared to TAP, Aer Lingus, etc. Feel like this will change for the worse.
Meh. SAS is a poor man's Finnair.
Won't make much difference which alliance they end up in.
Unless you live in Germany and travel frequently to Sweden/Denmark.
And the SAS lounges at their hubs are still better than the partner lounges. So that will be a loss
That says a lot given the state of Finnair! ;-)
Being a Lifetime Gold Member with SK my prime concern at the moment is what will happen with that status!
You'll probably continue to have Lifetime Gold Member with SK because (1) it's for life and (2) SK will continue to exist.
You are better off than if SAS shut down in bankruptcy opposed to being reorganized with AFKLM as a new investor.
Hey Ben, this makes me think, I would love post discussing what happens to future reservations when a partner stops being a partner. So if I booked a SAS flight through let’s just say United for next June, would I be screwed? How does that work? I have quite a few partner flights next year and this always makes me nervous!
If your flight is ticketed, nothing will happen to it as such. But if SK has changed alliances by then, you will not be getting any Star Alliance benefits.
Thanks CPH. I don't know why but the partner thing stresses me out, but good to know reservations are safe if ticketed. Thanks again!
As a Swede and a SAS frequent flyer (for my whole life) I can attest we’re all gutted by this move… such a fall from grace to go from a founding member of star alliance to join the alliances of the unwanteds was really hoping for a LH acquisition but they’ve been reluctant to touch SAS for a while… anyways hoping for the best, this is better than not having an airline at all I
Guess
Your so right. SkyTeam is LITERALLY the Alliance of "Unwanteds".
I find that amusing but partially correct.
NW-KLM was technically the first real successful alliance that predates other alliance.
Then Star Alliance and Oneworld came and the leftovers formed SkyTeam.
There was also Qualiflyer in between
Oh god. Almost forgot about them. The alliance that doomed Swissair.
Does anyone remember “Wings”? The alliance that never took off. KL/NW + Malaysian + Kenyan were signed up, iirc. Possibly Garuda also .
Although I agree about it being the Alliance of the unwanteds, the only way is up and with Virgin joining, now SAS… who knows, maybe even TAP?…. Whether intentional or not, it feels like change is in the air. If only the alliance improves their offering!
SAS is a turdheap of an airline, so it's definitely not the way up for SkyTeam, if anything it's business as usual. Virgin and Garuda are actually the anomalies.
Why do you think or know that?
LH went for ITA and will quite likely try very hard to acquire a stake of TAP Portugal. Brazil and Africa matter quite a lot more to them than SAS routes. AF/KLM will also try hard to get TAP. A lot of interesting market consolidation going on.
I can understand how, from a Central / Northern Europe vantage, Sky could look like an alliance of "unwanteds" due in no small part to its historic weakness in the region. The global story is more nuanced, particularly for travelers to whom transatlantic connectivity is important.
In the Americas, there's a reason why SAS's potential new transatlantic JV partner Delta is not only the most profitable over time but also by all accounts the most...
I can understand how, from a Central / Northern Europe vantage, Sky could look like an alliance of "unwanteds" due in no small part to its historic weakness in the region. The global story is more nuanced, particularly for travelers to whom transatlantic connectivity is important.
In the Americas, there's a reason why SAS's potential new transatlantic JV partner Delta is not only the most profitable over time but also by all accounts the most highly regarded airline in the global industry. Delta consistently outranks almost all other airlines across the Americas on most objective measures (and in some ranking schemes on all objective measures) and frequently on measures of customer satisfaction (notwithstanding the announced plans to destroy the Medallion loyalty program with exorbitant earning tiers and reduction of benefits — this is where all major legacy carriers are heading). In Canada, WestJet (nonaligned Delta "core partner" and AF/KL partner) has recently outranked AirCanada on both on-time performance and customer satisfaction. In Mexico, the only premium airline is Aeromexico (Delta JV "core partner" and part subsidiary, AF/KL partner, Sky). In South America, LATAM (Delta JV "core partner" and part subsidiary) usually ranks top overall.
While I don't have familiarity with Lufthansa or Star's Central / Eastern European members, in Western Europe, many would regard Virgin Atlantic (Delta subsidiary and JV "core partner", AF/KL JV partner, Sky) more highly than British, and in my experience, Air France's on-board business product of late (both transatlantic and premium intra-Europe) is pleasantly differentiated in terms of service and food & beverage, reflective of the airline's express intention to [follow Delta's strategic lead and] focus on differentiation at the premium end of the market rather than merely competing on price. (Aside: Who knows what will happen with KLM & Schiphol, but it doesn't look good.) Lufthansa appears to have won the losers' bidding war for ITA, which doesn't do much for anyone and could bring financial headaches for Lufthansa. TAP — a profitable Star member — is up for grabs, and given Lufthansa's overall more-dominant position in Europe and IAG's clear dominance on the Iberian Peninsula and pending Air Europa acquisition, regulators may not allow a TAP tie up with either of them. A TAP tie up with AF/KL or a European discount airline wouldn't be good for Star's transatlantic connectivity.
In China, China Eastern (Delta "core partner", AF/KL partner, Sky) and Xiamen (Delta & AF/KL partner, Sky) were recently ranked top among alliance-affiliated carriers after China Southern (nonaligned Delta & AF/KL partner) and Hainan (nonaligned), besting Star's Air China. In Japan, Sky doesn't have a member, but highly regarded JAL is a partner of AF/KL. Next door, Korean (Sky) and Asiana (Star) are both highly regarded, but Korean (Delta JV "core partner", AF/KL partner, Sky) may still complete its acquisition of Asiana, marking another loss for Star.
In ME / South Asia, Sky is weakest. Delta and El Al recently announced a strategic partnership that aims to bring El Al into Sky, however, and Etihad recently tied up closely with AF/KL. While to-be-launched Riyadh Air — which like AF/KL has expressed the intention to serve a premium market segment — hasn't announced an alliance affiliation, given Saudia's Sky membership, Qatar's oneworld membership, and Emirates' recent tie-up with Star's United, the most likely alliance for the new (premium?) airline would be Sky.
In Australia, Sky doesn't have a member and is weakest, but Qantas is a partner of AF/KL. In Southeast Asia, while Sky is weakest, Garuda (Sky) ranks highly, and Vietnam (Sky) recently got a five-star rating from SkyTrax (although SkyTrax ratings are for the most part just garbage bought by fees paid by airlines to the rating agency's affiliated for-profit consultancy).
Living in Seattle with family in Minneapolis and Atlanta, I end up flying Delta and Sky most often. But I don't feel emotionally attached to them and consider myself a "free agent" who would switch airlines and alliances if it made sense. I'm not particularly interested in oneworld since American Airlines is garbage by almost all ratings, and while I would consider Star, United doesn't measure up to Delta (other than in raw number of routes and seat-miles flown), and Star's transatlantic options between Americas and Europe just aren't as good as Sky's.