Alitalia set to join SkyTeam
Alitalia, the Italian flag carrier, is expected to sign a commercial partnership deal next month that will take it into the SkyTeam airline alliance, led by Air France and Delta Air Lines of the US.
The Alitalia board confirmed on Friday that it was in exclusive negotiations with the French airline and its SkyTeam partners, which also include AeroMexico, CSA Czech Airlines and Korean Air.
The commercial accord will start with a codesharing agreement with Air France, allowing the two airlines to sell their partner’s flights as their own, which will be extended to other SkyTeam members.
The Italian treasury, which controls 53 per cent of Alitalia, still needs to approve the deal but that decision is thought to be imminent.
The conclusion of the deal will come as a huge boost to Francesco Mengozzi, who took over as Alitalia’s chief executive at the start of the year under a strict mandate to find an alliance partner as soon as possible.
The Italian airline had effectively been in limbo since early last year, when Dutch airline KLM pulled out of an ambitious project to merge the two carriers’ European operations at the last moment.
The failure to find another suitable partner for Alitalia after the collapse of that deal eventually cost Mr Mengozzi’s predecessor, Domenico Cempella, his job.
Alitalia and Air France know each other well from a previous codesharing partnership that ended when the Italian carrier began merger talks with KLM. Airline analysts have long argued that renewing links with Air France was Alitalia’s best option.
Mr Mengozzi has managed to resist political opposition to a link-up with Air France, Europe’s third largest airline, which resulted from concerns that Alitalia would be relegated to a junior partner in the alliance. There had been some moves to push the airline back together with KLM or into a tie-up with Swissair.
As a medium-sized European airline, membership of one of the world’s main alliance groupings is vital to Alitalia, to help bolster its weak international route network.
Commercial alliances are necessary because airlines are artificially restricted in their ability to grow beyond their own national markets.
These alliances initially bring revenue benefits from increased traffic but closer cooperation can also help cut costs by eliminating duplication and increase buying power in such capital intensive areas as aircraft purchasing.
Normal merger and acquisition activity in aviation is made virtually impossible by foreign ownership limits, which are set at 49 per cent within the European Union.
Airline executives expect these limits will eventually be lifted and that the European industry will coalesce around its big three carriers – Air France, British Airways and Lufthansa – mirroring developments in the US.
Financial Times
