Posts Tagged 'Alitalia'

Lufthansa Joins Others In Run For Alitalia

Alitalia had a board meeting a few days ago, regarding the potential sale of the carrier during direct negotiations with potentially interested parties, after the failed open tender earlier this year. The shortlist of six potential buyers was compiled following consultation with Citigroup and industrial adviser Roland Berger. 

The list comprises Aeroflot, Air France-KLM, AP Holding (Air One), Cordata Baldassarre, Lufthansa and TPG (formerly Texas Pacific Group). This means four out of the six potential buyers are from the airline industry. Aeroflot and Air One (and TPG) have taken part in the auction process earlier this year, but both withdrew after learning about the actual situation and state of the troubled Italian carrier, and Air France-KLM has expressed their interest some time ago as well. But Lufthansa has not yet previously taken part in any negotiations (at least not publicly). The Italian government wants to sell most of its 49.9% in AZ and asked Chairman Maurizio Prato, who was appointed in July, to identify potential buyers after its own selloff efforts failed.

“The board has resolved to carry out discussions to assess the interest” of the six identified parties, Alitalia said, adding that it intends “to complete such discussions in the shortest possible timeframe.”

Corriere della Sera reported yesterday that AF KLM is seeking to acquire an initial 15%-20% stake in the loss-making airline through a share swap and would consider a full integration only if the Italian flag-carrier’s earnings improve over the next 2-3 years.

Air France-KLM has previously said it would be willing to listen to any proposition Alitalia makes but would not do a deal unless it created value for the airline.

A Lufthansa spokeswoman said a partnership with Alitalia must make sense for both sides, adding the German airline was basically open for possible talks. Knowing how Lufthansa has turned around the troubled Swiss carrier, Swiss International Airlines, it would make sense to repeat the same procedure with Alitalia, but the Italian airline is in a much worse financial crisis and situation these days…

We will keep you posted on the developments

by balint01

Air France KLM Adds Alitalia As Potential Merger Target

Air France KLM Logo 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.

Iberia logo 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.

Alitalia logo 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.

by balint01

RyanAir Responds to Alitalia Reduction Plan At Milan-Malpensa (MPX)

Alitalia logo We know that Alitalia has been struggling to survive basically each day of operations for years now, and that several privatization attempts by the Italian government have failed, as most contenders have backed out of the deal, as soon as they learned about the real numbers, and the real situation at the Italian Flag-carrier. Not so long ago, after the last failed privatization tender, the Italian government named a new CEO and management, which after a few weeks have come up with a survival and restructuring plan.

It was announced on 05SEP2007, that Alitalia plans to scrap around 150-170 flights of its 340 daily flight from Milan Malpensa airport (MPX), as part of the new business plan to stop (or reduce) the financial difficulties. The airline confirmed around the beginning of September, that is “no longer able to operate efficiently out of two hubs” due to mostly economic reasons. At that time there were no details of the plan available, but the Italian carrier said that its new strategy includes the increase of activities at Rome Fiumicino while repositioning Milan Malpensa flights by focusing on specific business demands. It would also mean consolidation of its cargo and crew bases as well as of maintenance activites at the main airport of the North-Italian city of Milan.

Milan is the business and industrial center of Northern-Italy and a relatively rich region just South of the Alps, and one of the richest areas in Italy. If Alitalia had flown a daily 340 flights from the airport until now, and just all of a sudden cuts half of those, it would mean a huge loss in air travel services for the region. But under the European Union Open-Skies agreement, we could be certain immediately after the plan was revealed that another European airline would move into the vacuum of 170 missing daily flights, if (or as soon as) it had the chance. The real question was only the identity of the airline(s) that would take over most of the market left behind by Alitalia. 

RyanAir On 13SEP2007 (so only 8 days after the Alitalia announcement!!) Dublin-based Irish RyanAir has told the press on a news conference, that they are ready to launch 80 new routes from two Milan airports stepping in to the place left by Alitalia. Europe’s biggest low-cost carrier is prepared to use an additional 12 airliners at Milan’s Malpensa airport (worth an $840 million investment by 2012) and another six at Serio airport in Bergamo (which means an investment of $420 million by 2012 next to the already based 4 aircraft), according to company spokesman Peter Sherrard. The planes are worth more than USD$1 billion at list prices and are part of a hefty backlog of 171 (!) planes Ryanair has on order with Boeing. At Malpensa, Ryanair would launch 50 European flights and 10 to domestic Italian destinations, he said. It is not yet known (or announced) whether if RyanAir will buy slots (slot = the right to land (and take-off) at a particular airport at a given time-frame) from Alitalia or directly from the concerned airports.

If we look at the numbers, there are 170 flights being cut back by Alitalia, and 80 of those already have an alternative offered by RyanAir. If we expect that about 20 percent of the AZ flights to be cut were losing money big time and were not sustainable under any circumstances, there are still about 60 flights up for grabs!! Who will be the next one to move into Milan-Malpensa and service the Italian passengers out of that region? Probably Air One, the second biggest Italian airline will take over some routes and will gain a bigger market share, and I can also foresee that Lufthansa/Swiss may use the vicinity of their hubs (Munich and Zürich) to grab some of the passengers on their connecting flights. And then of course other low-costs could also be targeting the unserved demand, but that is highly risky to tip any of those as a second player after RyanAir.

by balint01

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