Air France-KLM deal to go ahead
The union of Air France and KLM is to go ahead, creating a new European airline that will overtake both British Airways and Lufthansa to be the biggest in Europe.
And in a statement released this morning, it was also revealed that Italian carrier Alitalia could join the combined group at a later date.
The new group is to be called Air France-KLM with the two airlines stating that they expect to sign off the deal “within the next few weeks.” The deal is effectively a merger, although the two airlines will continue to fly under their current brands and will maintain their existing Paris Charles de Gaulle and Amsterdam Schipol hubs.
Air France chairman and chief executive Jean-Cyril Spinetta said: “We have always been convinced of the necessity of consolidation in the airline industry. Today, we announce a combination with KLM that will create the first European airline group, which is a milestone in our industry.
In the 2002/02 financial year the two airlines had combined sales of 19.2 billion euros. They said benefits of the new deal would include cost savings of up to 495million euros a year by the fifth year of the merger, as well as strengthening the SkyTeam alliance, which would become the second largest worldwide. The airlines claimed passengers could expect to benefit from a larger range of destinations and more convenient connections.
Most of the new group will be owned by Air France shareholders. Current KLM common shareholders would own a 19% share, while the French government’s stake would drop from 54% to 44%. Other Air France shareholders would own the remaining 37%.
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