24 June 2024: The Bundeskartellamt has cleared the planned acquisition in the context of Scandinavian airline SAS’s restructuring. In the US, SAS is in a creditor protection proceeding under the US Bankruptcy Code.

SAS has selected as its new investors a bidding consortium consisting of global investment company Castlelake, Air France-KLM airline, the Kingdom of Denmark and investment company Lind Invest. Each member of the consortium is to acquire a non-controlling minority shareholding in SAS. The Bundeskartellamt has now cleared plans by investor Castlelake and the Kingdom of Denmark to each acquire more than 25 per cent of the shares in SAS as well as plans by Air France-KLM to acquire less than 25 per cent of the shares in SAS. Lind Invest’s plans to acquire shares in SAS were not subject to German merger control.

Andreas Mundt, President of the Bundeskartellamt: “Having examined the acquisitions of shares in SAS, we have no competition concerns about the project. Our examination mainly focused on scheduled passenger flights and, within this sector, on Air France-KLM’s acquisition of shares in its competitor SAS. We have examined all non-stop and one-stop connections from and to Germany offered by the two airlines. It is not to be expected that competition will be seriously affected on short- and medium-haul routes from Germany to destinations in Europe or on long-haul routes to the US and Asia or vice versa.”

In Europe there are no overlaps between SAS and Air France-KLM with regard to direct flights from Germany. SAS offers non-stop flights from Germany to Copenhagen, Oslo and Stockholm only, Air France-KLM offers them to Paris, Amsterdam and Nantes. With regard to indirect flights to destinations offered by SAS, Air France-KLM is a less significant competitor at most, with Lufthansa, in particular, providing sufficient options for passengers to choose from. SAS’s activities in the upstream and downstream markets for ground-handling and maintenance services were not expected to lead to possible market foreclosure to the detriment of its competitors, neither was the Kingdom of Denmark’s stake in the company operating Copenhagen Airport, which offers the provision of airport infrastructure services to airlines. The planned acquisitions do not affect SAS’s competitors in this respect.

With regard to long-haul routes, the Bundeskartellamt has taken into account that Air France-KLM cooperates with Delta Airlines and Virgin Atlantic Airways via the North Atlantic Joint Venture, coordinating flight schedules, fares and capacities for flights between Europe and North America. Nevertheless, due to competition from major airlines such as Lufthansa, United Airlines, British Airways and American Airlines, the acquisition of a minority shareholding in SAS does not raise competition concerns for direct and indirect connections. With regard to the indirect connections offered by the parties from Germany to Asia and vice versa, passengers will also still have sufficient options to choose from after the concentration. The same is true for the various air cargo markets from and to Europe as well as the global aircraft financing sector.

The Bundeskartellamt has examined the project because German merger control rules also apply to acquisitions of non-controlling minority shareholdings. The requirements for this include that the acquisition of less than 25 per cent of the shares or voting rights creates, at least, a material competitive influence.

Background

SAS is a global airline operating hubs in Copenhagen, Oslo and Stockholm. It provides air passenger and cargo transport services. Via its subsidiaries SAS also provides ground-handling services for airlines at Scandinavian airports and offers aircraft repair and maintenance services.

Air France-KLM is currently the largest European airline by passenger kilometres flown and a founding member of the Sky Team Alliance airline alliance. It provides scheduled passenger air transport services as well as air cargo transport and aircraft maintenance services. Its main hubs are located in Paris and Amsterdam.

The Kingdom of Denmark already had a minority shareholding in SAS prior to SAS’s restructuring and also has a minority stake in the company operating Copenhagen Airport.

Castlelake, via its investment companies, invests in the aviation sector and offers airlines financing solutions for aircraft purchasing and aircraft leasing.