14 January 2009

Air France-KLM to buy stake in Alitalia

Air France-KLM is planning to buy a 25% stake in Alitalia for Ã¢'š~¬323m, subject to regulatory approval by Eurpean competition authorities.

Alitalia was finally re-born today after a Ã¢'š~¬1.052 billion deal was struck with the Compagnia Aerea Italiana consortium.

Under the deal, the airlineÃ¢â¬â¢s assets merged with those of rival Italian airline, Air One.

Air France-KLM chairman Jean-Cyril Spinetta said: "In view of the numerous challenges facing our sector, co-operation between airlines is becoming increasingly necessary, and this partnership represents an important milestone.

"We are happy with this reinforced partnership with Alitalia, which represents a compelling development opportunity for both our companies, and is in the interest of our shareholders, our customers and our employees."

By years two or three, Air France-KLM expects to save around Ã¢'š~¬90 million a year in synergies while Alitalia expects to generate synergies of around Ã¢'š~¬280 million.

These will be achieved by optimising their networks and revenue management, extending the existing joint venture between Air France and Alitalia, and implementing a joint venture between Alitalia and KLM.

Alongside Air France-KLM, AlitaliaÃ¢â¬â¢s other main shareholders include the Riva Group, IMSSI, Banca Intesa and the Benetton group.

By Bev Fearis