Alitalia gets green light for Air France agreement
Italy’s new centre-right government has given Alitalia the go-ahead to forge a commercial agreement with Air France, ending a long period of uncertainty over the Italian airline’s future.
In an announcement that led to a sharp rise in the Alitalia share price on the Milan stock exchange, the Italian treasury said it viewed “positively” the recent negotiations between Alitalia and Air France over a commercial agreement, approving plans that were presented to the government on Tuesday night by Alitalia’s chief executive Francesco Mengozzi.
The treasury’s announcement paves the way for Alitalia to approve a memorandum of understanding with Air France at a board meeting on July 9, leading to the full implementation of the alliance in October.
The commercial agreement is expected to bring Alitalia into the SkyTeam global airline alliance led by Air France and Delta Air Lines of the US.
It is likely to include a joint venture arrangement between the French and Italian carriers on their services between France and Italy allowing them to share revenues and profits and to harmonise capacity and schedules.
The deal will significantly enhance the competitive strength of the SkyTeam grouping in its battle with the rival alliances Star, led by Germany’s Lufthansa and United Airlines of the US, and Oneworld led by British Airways and American Airlines.
SkyTeam already includes Korean Air, AeroMexico and CSA Czech Airlines, and Jean-Cyril Spinetta, Air France chief executive, said recently that the grouping was also seeking additional members in south-east Asia and in South America, most importantly in Brazil.
Air France has rapidly developed Paris’ Charles de Gaulle airport into the most powerful aviation hub in Europe and is already able to offer more timely connections to more destinations than any other airline in Europe.
The deal with Alitalia will bring together the strength of this network, which already links the Paris hub with Delta’s main US hubs in Atlanta and Cincinnati, with the traffic volumes available in the Italian market and in particular in the affluent regions of northern Italy.
The commercial agreement between the two airlines will include a code-sharing arrangement, allowing the carriers to sell seats on each other’s flights, but it may well exclude an exchange of shares.
Alitalia shares rose by E0.14 or 10.5 per cent to close at E1.50 on the Milan bourse following the treasury’s statement.
Italy and France have recently seen tensions over French state-owned EdF’s purchase of a stake in Italian electricity group Montedison. But Italian ministers admitted on Wednesday that the choice of Air France as a partner was the only realistic one after KLM, the Dutch carrier, had pulled out of alliance plans last year.
Alitalia, which is expected to report losses of more than L500bn ($223m) this year, is the smaller of the two companies. Air France had revenues of E12.3bn ($10.6bn) in the year to 31 March 2001, against E5.4bn for Alitalia
Financial Times
