Air France KLM has once again admitted their interest in Iberia and Alitalia, which airlines are basically on sale. Iberia, the Spanish national carrier is profitable, but the shareholders wish to find a new owner to protect the company in the long run, while Alitalia has been making losses for long decades by now, and the government is forced to sell it, basically under any circumstances.
Air France KLM wants to grow, and now emphasizes it once again. They are already the biggest European carrier, but they want to move forward and wish to become a major driving force behind the ongoing consolidation of the European Airline Market.
Air France KLM Chairman and CEO Jean-Cyril Spinetta yesterday said in an interview with the Financial Times, that they are indeed studying a potential merger with either Alitalia or Iberia. He said AF KLM has held “informal” talks with potential Spanish financial partners (see earlier report by Airlineworld), though it is not yet in official discussions with Iberia. The cooperation with Iberia would be a little more complicated, but the Spanish carrier is in good financial shape at the moment, and is the leading airline between Europe and South-America. AF KLM are one of the leading members of the SkyTeam alliance, while Iberia is a founding member of oneworld. How they would solve this situation, is not yet known, it is probably one of the major issues in the ongoing evaluations. According to Spinetta: “We are in the phase of evaluating the potential for cooperation with Iberia.”
He explained that AF KLM declined to participate in the failed auction earlier this year for the Italian government’s stake in Alitalia because it did not believe the terms and conditions set for the sale were viable. But the situation has changed with the appointment of a management team led by Maurizio Prato, who initiated a new restructuring effort, which includes cutting back traffic at Milan-Malpensa hub, and has been asked by the government to sell the state’s 49.9% stake, he said.
“If Mr. Prato wants to talk to us, we will listen carefully,” Spinetta said. “He has a clear mission to sell this stake, but how he sees this problem I don’t know.” He added that “the Italian market is very strong. There are huge business traffic flows and tourist leisure flows. The potential is very high.” And knowing that both airlines being members of SkyTeam, the traffic integration would not be that big of an issue in this case, but the financial situation is the one that would easily give a headache to AF KLM. Now, that several privatization attempts have failed for Alitalia, AF KLM may be in a better (and stronger) position to discuss a possible solution face-to-face with Alitalia, and Mr. Prato.