Oct 3, 2023, 2:27 pm

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SAS plans to leave Star Alliance and join SkyTeam

On the 3rd of October SAS announced further steps as part of their SAS FORWARD plan. SAS has raised nearly 12.9 billion SEK as part of their Chapter 11 restructuring process. This will mean current shareholders are wiped out and the company will be delisted.

The new owners include Air France-KLM, Castlelake, Lind Invest and the Danish state.

As such, SAS plans to leave Star Alliance and join Air France-KLM's Sky Team alliance by summer 2024.

FAQ:

What does this mean for EuroBonus?

Eurobonus members can still book travel on Star Alliance carriers until the end of the transition period.
~~Future affiliation with Air France-KLM's Flying Blue frequent flyer programme has not yet been decided.~~
In the meantime the agreement between SAS and the investing consortium includes a provision for preparations of merging EuroBonus into FlyingBlue once AF-KLM owns more than 50% of the outstanding shares. It thus seems very likely that EuroBonus will ultimately be merged into FlyingBlue, the timeline and details of this are, however, still unclear.

SAS EuroBonus FAQ:
On October 3rd 2023, SAS announced the intention to eventually join SkyTeam and leave Star Alliance. For now the EuroBonus program remains unchanged. SAS will keep you informed about what to expect over the coming months and will provide updates continuously on the EuroBonus website.

1. What will happen to EuroBonus?

No changes are being made to the program and EuroBonus will remain SAS's loyalty program. As a member, you will continue to earn and use points on SAS as today. Your status and benefits as a EuroBonus member when you fly with SAS will not be impacted. • Delivering an attractive loyalty program to SAS's loyal customers will remain the top priority for us and our new owners, even after SAS changes ownership and alliance. SAS intends to eventually leave Star Alliance and join SkyTeam, and adjustments to the program will be made accordingly. As long as SAS is a member of Star Alliance, EuroBonus members can continue to enjoy the same benefits as they do today when flying on a Star Alliance partner airline.

2. What will happen to my EuroBonus points?

No changes are made to your EuroBonus points. You will keep all points earned until now and will continue to earn and use points just like today.

3. What will happen to my EuroBonus tier status?

No changes are made to your EuroBonus tier status. You will retain your status and your progress made during your qualification period. Requirements to reach each tier level and benefits included in each tier remain the same.

4. What will happen to my EuroBonus Lifetime Gold status?

No changes are made to the EuroBonus Lifetime Gold program. EuroBonus Lifetime Gold memberships will be honored even after SAS joins SkyTeam, and all progress made towards Lifetime Gold will be kept.

5. Do I keep my status benefits when I travel on another Star Alliance partner airline?

While SAS remains part of Star Alliance, you will enjoy the same status benefits as you do today when you fly with a Star Alliance partner • When SAS eventually joins SkyTeam, you will also be able to enjoy similar status benefits across the extensive SkyTeam network.

6. Can I still earn points when I fly on another Star Alliance carrier?

While SAS remains part of Star Alliance, you will be able to earn EuroBonus Basic points when flying on a Star Alliance airline partner flights

7. What will happen to my existing Star Alliance award bookings?

Existing bookings remain unchanged and will be honored even if you fly after SAS eventually leaves Star Alliance

8. Can I still use my points to redeem on other Star Alliance carriers?

While SAS remains part of Star Alliance, we will allow you to use EuroBonus points to book Star Alliance award trips

9. Can I still earn points on credits cards and other non-airline partners?

10. Can I still use my EuroBonus points on non-airline partners such as rental cars or hotels?

11. What about other Star Alliance partner members flying on SAS?

While SAS remains part of Star Alliance, members of other Star Alliance member programs will keep their status benefits while flying on SAS, and will be able to spend their miles/points on SAS flights

Will there be opportunities to match with other programs to remain in *A?

Most likely yes, but it will have yet to be seen what opportunities will present itself.

Will AF - KLM take over control of SAS?

After a minimum of two years and pending regulatory permission, AF - KLM may increase its stake to grant it controlling power over SAS. However, the current situation indicates that there are agreements within the consortium, which would de facto give AF - KLM control with regards to certain aspects of SAS operations (as seen by the announcement to leave *A and join ST).

What is the ratio of the new ownership?

Castlelake: 32%
AF - KLM: 19.9%
Danish State: 25.8%
Lind Invest: 8.6%
Remaining equity to be distributed to existing creditors.

What happens to existing SAS shares?

This process makes current SAS shares lose their value. Some existing shareholders expressed displeasure about the decision and are questioning wether an American court can rule on making existing shares of SAS lose their value. It remains to be seen if legal action is taken.

Will SAS change their HUB strategy or move their HQ to Denmark?

This is as of yet unconfirmed but it seems likely that SAS might focus on CPH and move its HQ.

Will SAS join the SkyTeam transatlantic Joint Venture?

This is the stated goal of AF-KLM CEO, but will require regulatory approval.

How was this decided?

There was a bidding process and two bids were received. Private Equity company Apollo Global Invest had expressed interest in taking control of the airline.
The decision on the bids was taken roughly 30 minutes before the press conference on October 3rd as stated by Dilling.

What is the process now?

Nothing changes immediately. As of now SAS is still a member of Star Alliance and will continue to operate normally for the foreseeable future.
The announcements made today reflect the future plans, which are subject to approval by many different entities and regulatory bodies. These include the courts in the US to approve the Chapter 11 process, courts in Sweden which will have to approve the restructuring (and invalidation of shares), as well as the following, as taken out of the SAS press release: "(...) antitrust authorities, civil aviation authorities, the European Commission, and EFTA Surveillance Authority (as applicable), SAS leaving Star Alliance, the implementation of a Swedish Reorganization at the SAS AB level, and other customary conditions. There currently remains uncertainty in respect of satisfying such conditions and obtaining required approvals (...)".
We should hear more about if this is going through in the next couple of weeks.
SAS plans to exit Chapter 11 in Q2 2024 and leave Star Alliance and join SkyTeam before summer 2024.

Sources and links:

- SAS Press Release
- Communication E-Mail sent to EB members can be found in Post 114
- E24 (Information with regards to EuroBonus. Thanks to matin for the find in Post 64)
- Reuters
- AF-KLM Press Release
- SAS EuroBonus FAQ (Thanks again to matin for the find in Post 237)
- DInside on Merger of EuroBonus into FlyingBlue (Thanks to Frederik74 for the find in Post 473)

SAS to leave Star Alliance and join SkyTeam [eff. 01 Sep 2024]

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Apr 13, 2024, 2:15 am

#826

dark_phoenix

Join Date: Nov 2014

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Quote:

Originally Posted by the810

I don't see this as a problem, Scandinavia is among the richest regions of the world. Look at what BA has done with their grab of premium leisure segment, they regularly have 10+ rows of CE. With the right product I can't see a reason why this wouldn't work out of ARN and CPH. But of course not with AFKL's cold meals in paper boxes and SK's poor lounges.

Either way, I can't see how can SK be part of AFKL's network without offering business class. Nor do I see what is so special about SK for it to have a different product than AFKL once they take over a majority stake.

Honest question. If SAS re-branded Plus as Business, increased the price, but kept the same soft product...would you pay for it?

I ask because I doubt that SAS' position is going to improve so much over the next three years that they will truly invest in the PE/business soft product for intra-Europe (free middle seat, food that people wouldn't complain about, etc). If they were forced to align to AFKLM's approach, it's far more likely for the foreseeable future that they will just re-brand as business without offering anything new (maybe a hot towel like they did when first introduced Economy Extra/Plus, but then took away for cost savings).

I like SAS, but this is the same airline that rather than invest in better food options for Plus intra-Europe, went the cheaper route by having their IT department change the app to give you the ability to decline your meal sooner rather than decline it on-board. Saving costs on already low quality meals is cheaper than investing in better ones.

The problem isn't how rich the region is - it's the how much of those riches individual travellers are willing to part with for PE/C in intra-Europe. And I still don't understand yet how a change of alliance is going to solve the value perception problem that SAS has, even when it hops into the JV. After all, it's telling that those celebrating SAS joining SkyTeam the most are mostly excited about the options it gives them on partner airlines rather than about SAS itself.

Apr 13, 2024, 4:29 am

#827

CPH-Flyer

FlyerTalk Evangelist

Join Date: Jul 2011

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Quote:

Originally Posted by the810

Consistency is important for customers. If SK is suppose to feed AFKL at their hub, it's a problem if it doesn't have a business class. Both AFKL and LHG have a standardized product across the board (minus their low-cost subsidiaries), therefore I'd expect SK to be the same once they take over majority stake, unless there is a good reason why SK is different. And there will likely be commercial pressure even before that.

Consistency is nice, profits are better.

It will be interesting to see which one of us has the right guess about the direction that will generate the profitability.

Apr 13, 2024, 4:51 am

#828

jamesbrownontheroad

Join Date: Mar 2006

Location: UME 🇸🇪 / NWI🇬🇧

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Quote:

Originally Posted by dark_phoenix

Honest question. If SAS re-branded Plus as Business, increased the price, but kept the same soft product...would you pay for it?

It needs three things. Better food, a blocked middle seat and (ideally) a curtain.

The problem is that a vast amount of SK’s domestic and intra-Nordic traffic is driven by public sector clients who won’t allow employees to travel in J.

copperred and Storizontal Habilizer like this.

Apr 13, 2024, 5:05 am

#829

Jainzar

Join Date: Jun 2015

Programs: AY+, SK EB

Posts: 2,988

Quote:

Originally Posted by CPH-Flyer

Consistency is nice, profits are better.

It will be interesting to see which one of us has the right guess about the direction that will generate the profitability.

From my point of view there are too many changes coming that we will be able to determine this.

If/when SK joins the cartel then I expect that this helps more than a decision on the SH Plus or business product.

Apr 13, 2024, 5:30 am

#830

CPH-Flyer

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Quote:

Originally Posted by jamesbrownontheroad

I have quite fond memories of SK Euro J in 2000 to 2006, that used to be our cabin of choice, partly because SK held the Scandinavian market in a vice about the flexible and no weekend stay requirement fares. The introduction of Economy Flex that gave the same flexibility rules as Euro J was really a killer for the loads in J, and the J product tumbled from there. You'd have empty J sections and economy flex packed. Though the service in Plus as it is now has also taken quite a tumble from the early days of the concept.

But how quickly the corporate and public official travellers moved from J to Plus (as it is called now) just showed the lack of willingness to book J in the short haul market.

SKT-DK and dark_phoenix like this.

Apr 13, 2024, 8:29 am

#831

the810

Join Date: Apr 2010

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Quote:

Originally Posted by dark_phoenix

No, I wouldn't, hence my comment about crap food in paper boxes. I don't think that AFKL business class concept is competitive. But I definitely believe a good premium product can make more money than a bad premium product. As I asked above - what is left if you take *A benefits (lounges, gold track) out of SAS Plus? Why would anyone buy it? BA charges similar premium as SK for a very decent product and as result they get large CE cabins because people are willing to pay extra for it (myself included). They increase the revenue per seat and also gain more customers who would otherwise fly with someone else.

Quote:

Originally Posted by dark_phoenix

I like SAS, but this is the same airline that rather than invest in better food options for Plus intra-Europe, went the cheaper route by having their IT department change the app to give you the ability to decline your meal sooner rather than decline it on-board. Saving costs on already low quality meals is cheaper than investing in better ones.

It's the same airline but it won't be the same owner. AFKL isn't investing in a nearly bankrupt airline just so it bankrupts under their leadership. There needs to be a change of management style and that includes product.

Quote:

Originally Posted by dark_phoenix

And I still don't understand yet how a change of alliance is going to solve the value perception problem that SAS has, even when it hops into the JV.

It's not. But it will be the value perception that AFKL has that will count once they own the majority stake in SAS. And AFKL seems to think that offering business class on European flights is a good choice. As I said, I fail to see the difference between SK and the other two airline that should make AFKL choose a different product strategy with SK. SK is certainly not some super profitable business that can be left as it is.

Apr 13, 2024, 8:30 am

#832

the810

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Quote:

Originally Posted by CPH-Flyer

Consistency is nice, profits are better.

Absolutely but to make profit you need people to spend money for you - and preferably to do that even when you don't offer the cheapest fare on the market.

Apr 13, 2024, 6:34 pm

#833

CPH-Flyer

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Quote:

Originally Posted by the810

Absolutely but to make profit you need people to spend money for you - and preferably to do that even when you don't offer the cheapest fare on the market.

The problem is that Norwegian offers flexibility and fast track on very attractive fares in key business markets in Scandinavia. Norwegian is, as a business traveller, much better to deal with than eg. Easyjet. SK needs something to match that price wise, or they loose a big chunk of the corporate travel market. Premium leisure travel at rock bottom J prices is not what feeds the NPBT, the corporate travel segment does. Take Plus away and add J, and loose corporate travellers in large numbers, keep Plus and add J and be back at the empty J cabins with corporate travellers mainly in Plus, and J being connecting long haul travellers.

The Scandinavian market is remarkably price sensitive.

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Apr 13, 2024, 11:35 pm

#834

copperred

Join Date: Nov 2010

Posts: 440

Quote:

Originally Posted by the810

Scandinavian culture isn't built on spending wildly on nice to haves or else Norwegian wouldn't exist or be as dominant as it is. Scandinavians are viciously cheap by nature, although perhaps not quite as dogged as the Dutch. Most are very comfortable making do; the fact that charters are still a big enough business should give you another data point about how things work.

Having a 2-3 in business or something on short hop flights might be worth it but a lot of intra-Scandinavian routes are bare bones.

CPH-Flyer, dark_phoenix, vanillabean and 2 others like this.

Apr 13, 2024, 11:40 pm

#835

dark_phoenix

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Quote:

Originally Posted by jamesbrownontheroad

I would add here that those restrictions aren't just limited to public sector employees. A lot of companies don't allow premium economy or business travel.

Before SAS changed their upgrade bidding process and introduced fixed point upgrades, I was happy to bid to upgrade on all of non-Nordic föights and pay out of pocket (which is the majority of my SAS traffic). Now, with their new approach, upgrading doesn't make sense unless it's for their international routes.

Even allowing fixed points to benefit from the percentage bonus of one's membership level would be an easy win for SAS.

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Apr 13, 2024, 11:42 pm

#836

copperred

Join Date: Nov 2010

Posts: 440

There's a lot of talk about SK being a feeder to AMS and CDG but with the Dutch perennially uncertain whether they even want to have a hub, why not expand use in CPH? CDG isn't exactly a great airport. LHG has 4 hubs in the same area, and BRU to the west.

Apr 14, 2024, 12:33 am

#837

the810

Join Date: Apr 2010

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Quote:

Originally Posted by CPH-Flyer

Well, that's kinda my point. SK needs to do something. The question is whether they can cut costs to the point where they'll be cheaper than the competition and win on price. I suspect the answer is no. Then the question becomes what is SK going to offer in exchange for higher fares.

Apr 14, 2024, 3:41 am

#838

CPH-Flyer

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Quote:

Originally Posted by the810

If I had to guess, their two main problems are how to get more money out of the back of the bus in Europe (particularly on the mainly leisure routes) and how to keep operating costs down.

The price pressure from Norwegian et al is even worse for the leisure segment.

copperred likes this.

Apr 14, 2024, 10:30 am

#839

copperred

Join Date: Nov 2010

Posts: 440

Quote:

Originally Posted by CPH-Flyer

The operating costs piece is without question the biggest thing. To whit SAS Ireland, Connect etc. Or keeping old birds aloft rather than eat the higher upfront capital cost of buying new aircraft. SK focuses on labor as problem rather than trying to figure out how to make existing labor more efficient.

SK has been publishing sales in the US like fire sales. If you want to get new customers through lower prices today and interest later it's not the worst way. Getting people to bid for upgrades clearly is a decent revenue source. Expanding Plus would provide more capacity for the leisure traveler who might splurge on the little extra TATL.

Apr 15, 2024, 2:15 am

#840

oliver2002

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Operating costs for European airlines are usually split 30/30/30/10 on aircraft leasing/capital, fuel, crew, others. Being part of the AFKL group will perhaps lower the capital/maintainance cost thru synergies, fuel/crew/others remains the responsibility of SAS. The AFKL JV will bring SAS into the various cartels AFKL has built so inprove things on the revenue side and stop SK from discounting their longhaul product like TP/LO/etc. to even come on the radar of purchasing decisions. Being part of the DL/AF/KL/VS transatlantic JV will be a money spinner.

copperred likes this.