Skyteam news

[Pieter C. 5]

Air France KLM, Delta Signal Joint-Venture Deal

 

October 8, 2007

Air France KLM and Delta Air Lines on Monday signaled an imminent joint-venture deal on transatlantic flights by calling a joint news conference by the two airlines' chief executives in Paris on October 17.

 

Air France KLM declined further comment on the invitation, but it has said it is close to finalizing a deal with Skyteam partner Delta that would create better cost-sharing and integration on the transatlantic routes.

 

A source close to the matter said a deal would be signed at or around the October 17 event.

 

The deal follows an Open Skies agreement to free up competition between Europe and the United States from April.

 

(Reuters)

 

Alitalia Shortlists Six Possible Bidders For Talks

 

October 8, 2007

Alitalia said on Monday it had shortlisted six possible bidders for a stake in the troubled airline, whose auction by the government flopped in July.

 

It said the shortlisted investors were: Aeroflot, Air France-KLM, Lufthansa, smaller domestic rival Air One, US private equity firm TPG, and a consortium led by a former chairman of Italy's constitutional court.

 

Air One, Aeroflot and TPG all took part in the government's auction process but pulled out, while Air France-KLM and Lufthansa spurned that sale but have since suggested there might be interest if conditions changed.

 

Alitalia said in a statement its board had decided to "carry out discussions to assess the interest" of these six possible suitors, adding it hoped to complete talks as soon as possible.

 

A financial source said all options were still open on what kind of interest the shortlisted candidates might have, adding that parties were not talking specifics at the moment.

 

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.

 

(Reuters)

 

 

[Keith T 2]

Joint venture deal? Basically a JSA like QF/BA on the Roo Route?

 

Now if only BA/AA will stop pretending that anti trust restrictions are preventing them from cooperating on tatl.

 

[Pieter C. 5]

Keith,

 

Note: this is only for the AF-part of AF-KL; KL will remain 'hooked' on the NW Trans-Atlantic partnership (afaik)...

 

Moreover, AF is rumoured to start LHR-LAX v.v. flights eff. Summer 2008, and this might have something to do with the DL-deal as well (handling at LAX ?)

[Pieter C. 5]

Sabas And Citigroup Compete For Aeromexico

 

October 16, 2007

Mexico's Saba family increased its bid for money-losing Aeromexico to USD$170 million on Monday, while rival Citigroup and its partners estimated their offer is worth at least USD$202 million.

 

Citigroup and its Mexican partners sweetened their USD$160 million bid for Aeromexico last week by offering warrants reflecting the carrier's potential higher value within three years of acquisition.

 

The group, which promises to inject USD$240 million into the airline, said its offer could be worth as much as USD$213 million, based on an independent estimate by N.M. Rothschild and Sons.

 

The Sabas, who also said they would invest to rescue Aeromexico, had already raised their bid to USD$166 million.

 

Rothschild and Sons estimate the variable part of the offer by Citigroup and its partners is worth as much as USD$53 million, giving the offer a total value of up to 2.3401 pesos per share, Banamex, Citigroup's local unit, said in a news release.

 

The government of Mexico owns 62 percent of Aeromexico and its holding company, Consorcio Aeromexico, while the rest of the company is listed on the Mexican stock exchange.

 

Crippled by high labor costs and competition from nimble discount carriers, Aeromexico lost USD$63 million in the second quarter.

 

The Sabas, one of Mexico's wealthiest families, said their offer expires on Tuesday, while the bid by the Citigroup group runs out on Wednesday.

 

Aeromexico said in a statement its board considered both offers reasonable, and recommended investors carefully analyze the variable part of the Citigroup bid.

 

If the offer by Citigroup and its partners is accepted, the new owners would de-list the carrier and later relaunch it on the stock market.

 

"We would list in the Mexican market, and potentially on international markets, through a public offering of at least 15 percent of Consorcio Aeromexico or its main subsidiary," Jose Luis Barraza, who represents Citigroup and its partners, told reporters earlier.

 

The group forecast that Aeromexico could become profitable in 12 to 16 months after the buyout.

 

A third bid by rival Mexicana was rejected last week by Mexico's anti-trust agency.

 

(Reuters)

 

[Pieter C. 5]

New Offer Promised For Aeromexico

 

October 17, 2007

The Mexican government said on Tuesday it was close to accepting a USD$206 million bid by Citigroup and its partners for Aeromexico, but a rival group promised a new offer in a heated bidding war for the money-losing airline.

 

Mexico's Saba family and Citigroup raised their rival offers for Aeromexico earlier in the day, with the top bid coming from Citigroup at 2.2508 pesos per share.

 

The Saba family promised to raise its bid on Wednesday after offering 1.90 pesos per share, or USD$174 million for Aeromexico, the country's largest carrier.

 

"It's not over 'til it's over. The last minute has 60 seconds," Antonio Franck, the Sabas' lawyer, told reporters.

 

Alternatively, Citigroup is offering USD$171 million in cash or 1.8686 pesos per share, plus warrants reflecting the future value of Aeromexico -- essentially a bet on whether the US bank and its Mexican partners can make the airline profitable.

 

The Mexican government said it would accept the Citigroup bid unless a better offer came in by Wednesday afternoon.

 

The government owns 62 percent of Aeromexico and its holding company, Consorcio Aeromexico, while the rest of the company is listed on the Mexican stock exchange.

 

An effort to sell the airline in 2005 failed to attract a suitable offer.

 

The government said in a statement that its goal was to win the highest price possible for the airline, which lost USD$63 million in the second quarter, in the shortest time.

 

Mexico's airline industry has taken off in recent years as low-cost airlines such as Interjet and Volaris offer flights at prices almost as low as bus fares.

 

Despite the market's growth, Aeromexico, which has continued to charge traditional prices, has lost ground.

 

Citigroup and its partners have promised to invest USD$240 million in Aeromexico to turn it around should their offer be accepted. The Saba family has also said it would invest heavily to improve the airline.

 

The Sabas started the bidding to buy 100 percent of Aeromexico in August with a USD$99 million offer.

 

Citigroup and its partners recently bid USD$160 million for Aeromexico, as well as warrants reflecting the carrier's potential higher value within three years of the acquisition, when Citigroup would re-list a small part of the airline on the stock market.

 

Aeromexico and Mexicana, the country's two main airlines, were brought under government control after they went bankrupt in the mid-1990s.

 

Early efforts to privatize the airlines were killed off by the industry-wide crisis that followed the September 11, 2001, attacks in the United States.

 

Mexicana was finally sold to Mexican hotelier Posadas.

 

(Reuters)

 

Air France Chief Sees Talks Soon With Alitalia

 

October 17, 2007

Talks between Air France KLM and Alitalia will start in coming weeks, Air France KLM CEO Jean-Cyril Spinetta said on Wednesday.

 

"We are on the short list issued by Alitalia. Discussions haven't started yet, but they will probably start in coming weeks," Spinetta said.

 

He added Air France was not interested in opening up routes to the United States from Italy under the Open Skies deal if its merger talks with Alitalia did not lead anywhere. And if it did a deal with Alitalia, the Italian carrier would handle those routes.

 

He said Air France KLM was also still evaluating whether to get together with Iberia.

 

Confirming figures reported by analysts after an investor meeting on Monday, Spinetta also said the French airline's transatlantic joint venture with Delta would yield several tens of millions of euros in profits for Air France.

 

(Reuters)

 

Delta CEO Opens Door To Consolidation

 

October 17, 2007

Delta Air Lines positioned itself as a buyer in the US airline industry as its new chief executive said the carrier wanted to take a leading role when the industry consolidates.

 

"We fully expect that this evolution toward a more consolidated industry will continue," said Richard Anderson, who took over as Delta CEO in September.

 

"Ultimately, it's our goal to be the undisputed leader in the airline industry. To achieve that goal, we must be on the leading edge of change to keep pace in this dynamic business environment," Anderson, the former CEO of Northwest Airlines.

 

"There are obvious benefits that could accrue from consolidation for our shareholders and employees," said Anderson. "We are evaluating the best path forward for Delta."

 

He said Delta, which emerged from bankruptcy at the end of April, would be best served by being a suitor rather than a target, but cautioned that his comments were "not a sign that anything is imminent."

 

Earlier Tuesday, Delta posted higher-than-expected quarterly profit on tighter cost controls and record revenue boosted by more international flights.

 

With the consolidation comments, Anderson joins Glenn Tilton of United Airlines parent UAL and Doug Parker of US Airways as the leading proponents.

 

"This is definitely something that is new for Delta, given that they were very, very aggressive during their bankruptcy proceeding in fending off US Airways' overture," said Brian Nelson, an analyst with Morningstar. "I think it's a 180 for Delta."

 

Delta vigorously opposed a hostile bid by US Airways, mobilizing its employees to help fend off the unwanted approach. A pro-consolidation stance could be taken as a slight by some Delta employees and could strain relations.

 

The Association of Flight Attendants is currently seeking to unionize Delta's flight attendants, appealing in part to uncertainty posed by potential mergers.

 

Delta and Northwest have often been rumored as potential partners since they both sought bankruptcy protection on the same day in 2005. Also, analysts say that Anderson has a close relationship with Northwest CEO Doug Steenland.

 

But so far it has been all talk. Airline mergers are hard to pull off and fraught with risk. Management differences, disparate fleet types, and labor conflicts can scuttle a deal that looks good on paper.

 

"These airlines like to talk a lot about consolidation because it gets the market excited," said Morningstar's Nelson. "Any time that a CEO can somehow put a merger premium on his stock price, he's going to go ahead and try to do that."

 

Some industry experts agree airlines that want to merge may stand a better chance of passing antitrust review during the Republican Bush administration compared with a potential Democratic one beginning in 2009.

 

"That's the recommendation I would give," said Edward Faberman, an aviation attorney with Wiley Rein in Washington.

 

He said the Justice Department has not moved to stop airline or other mergers generally, although the proposed US Airways/United deal collapsed in 2001 over competition concerns.

 

Antitrust officials did not block the American Airlines/TWA deal in early 2001 and the US Airways/America West merger in 2005. Both of those, however, involved failing companies.

 

"It depends on the scenario that's presented. I think if there were some economic difficulties -- fuel prices going up, certain other things -- I'm not sure Justice would aggressively attack it," Faberman said.

 

(Reuters)

 

Air France And Delta Set Transatlantic Venture

 

October 17, 2007

Air France-KLM and Delta Air Lines announced plans on Wednesday to team up on routes linking major US cities and London's Heathrow Airport in a challenge to rival British Airways.

 

The joint venture aims to take advantage of the Open Skies pact set to liberalize transatlantic rules next year, and will be implemented in April 2008.

 

It will first cover all transatlantic flights between the Air France and Delta hubs, as well as all flights operated by either carrier between London Heathrow and the US, they said. These flights will be sold by the non-operating carrier on a code-share basis.

 

Starting in 2010, "numerous" flights to all destinations between Europe, the Mediterranean and North America will be part of the joint venture, the airlines said in a statement.

 

"The revenue encompassed by the first phase of this joint venture is estimated at approximately USD$1.5 billion per year, and more than USD$8 billion per year for the second phase," they said.

 

Air France told investors on Monday it planned a new direct route from Heathrow to Los Angeles and would use Heathrow slots to serve nine US destinations under the Delta deal, according to analysts who attended the event, which was closed to media.

 

For decades, US access to Heathrow has been limited to two US and two UK airlines -- currently British Airways and Virgin Atlantic along with American and United.

 

Analysts said Air France KLM Chief Executive Jean-Cyril Spinetta told investors that the deal with Delta would add "several dozens of million euros" in profits in 2008.

 

The Delta venture is modeled in part on a 10 year old agreement between Northwest and KLM, the Dutch airline which is part of the Air France group.

 

Air France and Delta hope to extend cooperation to include Northwest Airlines and Continental Airlines once they win multi-party anti-trust immunity, analysts said.

 

The aim is to tap into large US domestic networks operated by the US carriers, and link these with Europe's busiest airport at Heathrow.

 

(Reuters)

 

 

 

 

 

 

[Pieter C. 5]

Lufthansa, Consortium In Talks On Alitalia

 

October 18, 2007

A consortium led by Italian lawyer Antonio Baldassarre is in early stage talks with Lufthansa for a possible bid for Alitalia, an Italian source close to the consortium said on Thursday.

 

Baldassarre's group and Lufthansa were both listed separately as part of an Alitalia shortlist of six potential buyers for the loss-making airline.

 

But Alitalia has said it would start talks with the consortium, which says it has set aside an initial EUR1.5 billion euros to buy the airline, only after it proves it has sufficient financial muscle to pull off a deal.

 

Lufthansa did not participate in an auction for Alitalia that collapsed earlier this year when all the bidders pulled out, saying it was not interested under prevailing conditions.

 

The German airline has since said it is open for potential talks, but that any partnership with the Italian airline must make sense for both sides.

 

Alitalia's Chairman Maurizio Prato told members of parliament on Thursday that the airline plans to identify its preferred partner within the first 10 days of November, an Italian lawmaker present at the hearing said.

 

Prato has said he prefers an industrial group that can reorganize the airline rather than an investment fund that may want to cash in its stake after a few years, a union source said after a meeting with him.

 

(Reuters)

 

A battle seems to be starting :

 

Citigroup, Saba Family Fight It Out For Aeromexico

 

October 18, 2007

Citigroup and Mexico's wealthy Saba family went head-to-head in a bidding war for Aeromexico with a flurry of late offers ahead of a Wednesday deadline for the money-losing airline.

 

The Sabas, who made three separate offers in less than 20 minutes around the deadline, were slightly ahead with their last USD$249 million offer, at 2.72 pesos per share, to buy the debt-ridden airline from the government.

 

Citigroup and its Mexican partners offered USD$248.6 million, or 2.7159 pesos per share for Aeromexico.

 

It was not immediately clear if all the bids made it in before a 4 p.m. local time (2100 GMT) deadline.

 

Mexico's government said earlier on Wednesday it would sell Aeromexico to Citigroup if its bid was the highest at the deadline.

 

A government agency handling the Aeromexico sale said it would "accept (the Citigroup offer) and take the necessary steps to carry out the sale" if the US bank's bid is highest by the deadline.

 

The Saba family, whose fortune from textiles, real estate and pharmaceuticals is calculated at USD$1.4 billion by Forbes magazine, has attacked the government's handling of the sale for a lack of transparency.

 

The government agency handling the sale had said it would only consider, not necessarily accept, the Sabas' final bid even if it were higher.

 

Aeromexico's shares closed 11.31 percent higher at 2.46 pesos on expectations that the bidding war, which began in August at USD$99 million, is not over.

 

Moises Saba slammed the government's handling of the sale process, saying a level playing field was not being used.

 

"I am very troubled by it," Saba said.

 

The airline, which posted a USD$63 million loss in the second quarter, has been hobbled by high labor costs and competition from nimble discount carriers.

 

The government owns 62 percent of Aeromexico while the rest of the company is listed on the Mexican stock exchange.

 

Mexico's airline industry has taken off in recent years as low-cost airlines such as Interjet and Volaris offer flights at prices almost as low as bus fares.

 

Despite the market's growth, Aeromexico, which has continued to charge traditional prices, has lost ground.

 

Citigroup and the Sabas are technically bidding for the holding company that controls Aeromexico, Consorcio Aeromexico, rather than the airline itself.

 

Acquiring the holding company rather than Aeromexico would let Citigroup get around a law limiting foreign ownership of Mexican airlines to 25 percent, a Citigroup source said.

 

Rival airline Mexicana bid USD$224 million, or 2.45 pesos per share, for Aeromexico on Wednesday, despite being forbidden from acquiring the airline by the country's anti-trust commission.

 

If the bidding war leads Citigroup to extend its public offer for several more days, it could give Mexicana, the country's No. 2 carrier, time to get back in the game.

 

(Reuters)

 

[Pieter C. 5]

EU Says SkyTeam Airlines Offering Airport Slots

 

October 19, 2007

Airlines in the Skyteam alliance have proposed opening up slots at airports in the European Union to address anti-trust concerns raised by Brussels, the European Commission said on Friday.

 

The Commission raised concerns last year about the possibility that cooperation between the alliance members could hurt competition.

 

"To address these concerns, the parties have offered commitments designed to facilitate new entry on the routes in question," the Commission said in a statement.

 

"The parties mainly offer to make slots available at appropriate EU airports to allow competitors to operate new or additional services and to share their frequent flyer programs."

 

The Commission invited interested parties to comment on the commitments proposed by Skyteam members Aeromexico, Alitalia, CSA Czech Airlines, Delta Air Lines, KLM, Korean Air, Northwest Airlines and Air France.

 

If the Commission accepts the commitments, any airline which then breaks them could be hit with a fine of up to 10 percent of total worldwide turnover.

 

If the EU executive rejects the commitments, it could pursue its antitrust procedure with a view requiring the airlines to end their cooperation in its current form on affected markets, the statement said.

 

(Reuters)

 

[Pieter C. 5]

Air France Decision Soon On Alitalia, Iberia

 

October 20, 2007

Air France-KLM, the world's largest airline by revenue, expects to take a decision on buying Italy's Alitalia or Spain's Iberia shortly, a Dutch newspaper reported its chief executive as saying.

 

The chairman and CEO of French-Dutch Air France-KLM, Jean-Cyril Spinetta, said in an interview with newspaper NRC Handelsblad that the company would decide on Alitalia on October 25 during a board meeting.

 

Spinetta confirmed the airline was on a short list of companies interested in Alitalia but he declined comment when asked whether Air France-KLM would make a bid for Alitalia alone or with other airlines.

 

Air France-KLM would take a decision on Iberia in the coming weeks, Spinetta said.

 

The airlines chief said KLM might also fly from London's Heathrow Airport, after the company announced that Air France would team up with Delta Air Lines to share routes linking US cities and Europe, starting with Heathrow.

 

Every European city might be used as a starting point for transatlantic flights, Spinetta said, citing Rome as an example.

 

A so-called Open Skies pact between the United States and the European Union enabled the deal with Delta Air Lines, and Spinetta acknowledged that other airlines, such as British Airways, could compete at airports important to Air France-KLM, such as Paris and Los Angeles.

 

(Reuters)

 

[Pieter C. 5]

Not such good news, unfortunately !!!

 

Air France Cabin Crew Unions Call 5-Day Strike

 

October 23, 2007

Unions representing cabin crew at Air France have called a five-day strike to press management to review salary and working conditions, trade union sources said.

 

"There is a strike notice from October 25 to October 29 included. All unions are taking part in it, which is a first at Air France," a union source said.

 

The sources said unions were trying to pressure management into renegotiating an agreement on salaries and working conditions that will expire at the end of 2007.

 

"Talks are about salaries and working time. Air France has so far refused unions' demands," the first source said.

 

"People are very motivated because some salaries have been frozen for 10 years, and working conditions have been affected to help the company recover. The company is now doing extremely well and we do not see the benefits of that," she added.

 

A spokeswoman for Air France-KLM, the world's largest airline by revenue, said a meeting between management and union representatives started on Monday, but she declined to say what they were discussing.

 

It was not immediately clear what proportion of Air France's cabin crew staff would effectively go on strike, sources said.

 

Disruption at Air France would follow a nationwide strike over pensions which crippled train, metro and bus transport in France last week.

 

Separately, Air France flights from Paris Charles de Gaulle Airport were delayed on Monday morning because of a strike by staff responsible for loading bags on planes.

 

(Reuters)

 

AFAIK, this will not affect the KLM flights...

 

Alitalia Workers Strike, 250 Milan Flights Cut

 

October 23, 2007

Striking Alitalia workers forced more than 250 flights at Milan's airports to be canceled on Monday in a protest at the struggling carrier's cutback plans.

 

Strikers blocked access to the main international airport, Malpensa, as part of the four-hour stoppage, Milan airport operator SEA said. The strike was the latest in a string of actions to hit Italy's national airline.

 

At least 197 takeoffs and arrivals were canceled at Malpensa, and another 57 at the smaller Linate Airport, Sea said.

 

The stoppage coincides with a visit to Italy by officials of the International Exhibitions Bureau. They are evaluating Milan's candidacy to host an international expo in 2015.

 

Alitalia said in August it would cut its presence in Milan, the hub of Italy's industrial north, as part of a survival plan as it looks for a buyer.

 

Another 25 flights were canceled at Rome's Fiumicino and Ciampino airports because air traffic controllers struck for four hours over a contract dispute, air traffic control company ENAV said in a statement.

 

A strike by Rome service crews also grounded or delayed some flights of low-cost carriers, the Rome airport operator said.

 

(Reuters)

 

KL1583/1584 to/from BLQ was also cancelled, as a consequence (ATC)...

 

 

[Pieter C. 5]

Air France Says Strike Would Stop Few Flights

 

October 24, 2007

Air France said it expects to operate 90 percent of its short and medium-haul flights and all its long-haul flights if a five day strike by cabin crew goes ahead later this week.

 

The notice of a strike from Thursday, October 25 to Monday, October 29, was submitted last Friday, the airline said.

 

The airline said in a statement that discussions with unions to try to avoid the strike had "not yet succeeded" and that it was thus forced to predict disruptions in its service.

 

Unions representing cabin crew at Air France have called the five day strike in a dispute with management about salary reviews and working conditions, the unions said on Monday.

 

Disruption at Air France would follow a nationwide strike over pensions that crippled train, metro and bus transport in France last week.

 

(Reuters)

 

Continental Signs Cost-Cutting Service Deals

 

October 24, 2007

Continental Airlines said on Tuesday that it signed new service contracts with Electronic Data Systems, GE Aviation and Hewlett-Packard.

 

The contracts are a big part of the No. 4 US airline's effort to cut annual expenses by about USD$100 million, the company said.

 

Cost cutting has taken on heightened importance for US carriers as fuel prices rise.

 

EDS and HP will each provide Continental with information technology services under multiyear contracts.

 

EDS will help Continental modernize its older airline systems and will also manage computers, software, and networks at the carrier. The technology services company said the seven-year contract with Continental is worth USD$550 million.

 

HP will be responsible for updating Continental's airport systems and will also provide the airline with servers, software, and storage systems.

 

GE Aviation will provide maintenance services for Continental's new and existing CFM56-7 jet engines, which are used in Boeing 737 aircraft. The contract runs until 2020.

 

(Reuters)

 

 

[Pieter C. 5]

Air France Strike Continues After Weekend Of Chaos

 

October 29, 2007

Cabin crew members at Air France said they would continue with a strike that brought misery to thousands of travelers at Paris airports over the weekend.

 

The company said it expected "major costs" as a result of the dispute.

 

"The cost is very important," Air France Chief Operating Officer Pierre-Henri Gourgeon told French TV station LCI. He added there were no precise estimates at the moment for what the financial cost might be.

 

A joint statement by various trade unions representing more than 60 percent of Air France flight attendants said the strike would go on until midnight, local time, on October 29.

 

The strike began on October 25. The dispute centers on renegotiating a framework agreement on salaries and working conditions that is due to expire at the end of 2007.

 

The situation became serious enough for the French government to intervene over the weekend.

 

Transport Minister Dominique Bussereau issued a statement demanding a speedy resolution to the affair and Bussereau himself went to Paris Orly Airport on Sunday to assess the situation.

 

"I have come to see how the passengers are getting on," he told TV reporters at the airport.

 

The strike has affected between 30 and 40 percent of flights, causing major disruption at airports with many French families due to leave for school half-term holidays.

 

Talks between management and trade union members broke down over the weekend. Air France reiterated it was open to further negotiations and the airline has warned that the strike could have an adverse financial impact on the company.

 

Air France said it operated around 65 percent of flights on Saturday. It expected to operate more than 60 percent of flights on Sunday and at least 70 percent of flights on Monday.

 

It said it had run 71 percent of flights on Sunday morning.

 

Air France is part of the Air France KLM group, the world's largest airline by revenue. The French state holds around 18 percent of the Air France KLM share capital.

 

(Reuters)

 

Lot's of passengers are re-routed via AMS, causing almost zero-chances for staff to fly on KLM

 

[Pieter C. 5]

Air France Eyes Quick Traffic Recovery After Strike

 

October 30, 2007

Air France said it hoped to return to normal service quickly after a five day cabin crew strike over pay, and added it would resume negotiations with union representatives on Tuesday.

 

Trade unions voted on Monday to end the strike at midnight as expected, a source said, but union representatives said it was unrealistic to expect a rapid return to normal traffic.

 

"For tomorrow, there is no chance that all the flights will take off. After five days of strikes, it can't happen like that. From a technical point of view, there is a time lag," said Sud air union spokesman Leon Cremieux.

 

But Air France KLM estimated all long-haul flights and 90 percent of its medium-haul flights would run normally, Chairman Jean-Cyril Spinetta told French RTL radio.

 

The strike, which began on October 25, hit thousands of travelers trying to take advantage of this week's school holidays and a public holiday on Thursday.

 

Air France has said it expected "major costs" as a result of the dispute, but the Paris-based air carrier said there were no precise estimates of what the costs might be.

 

Spinetta said he would meet union representatives on Tuesday morning and hoped to reach an agreement. At the heart of the dispute are pay and working conditions due to expire at the end of 2007.

 

Spinetta said the company was open to discussions about salaries, but would not give in to some demands.

 

"Before we've even started negotiations, some people are demanding that we put a financial package on the table. We refuse to do that," he said. "That's not social discussion, it's an ultimatum. It would be a surrender by the management, so it's a no."

 

Six unions -- representing nearly 80 percent of cabin crew staff at the last union elections -- met on Monday and voted to end the strike.

 

Spinetta said Air France-KLM, created from the 2004 merger of the French airline with Dutch carrier KLM, must be able to compete.

 

"If we want to continue to create jobs, we must stay competitive," he said.

 

In an interview in Monday's Le Parisien newspaper, Secretary of State for Transport Dominique Bussereau urged a swift end to the dispute and said Air France must become better at providing travelers with information about strikes.

 

(Reuters)

 

Northwest Air Profit Exceeds Expectations

 

October 30, 2007

Northwest Airlines on Monday beat forecasts, reporting a USD$244 million quarterly profit on cost cutting and higher fares.

 

The profit for the No. 5 US airline, which exited bankruptcy in May, matches profits for rivals in the third quarter and bolsters the case for industry recovery despite sky-rocketing fuel prices.

 

Northwest shares rose following the report and were 3.17 percent higher at USD$17.90 on the New York Stock Exchange.

 

"These results are consistent with our five-year business plan, when adjusted for higher fuel prices," Chief Executive Doug Steenland said in a statement.

 

It was the first full quarter for Northwest since exiting bankruptcy.

 

A year earlier the airline reported a loss of USD$1.2 billion, impacted by charges related to its reorganization.

 

Excluding special items, Northwest reported a third-quarter profit of USD$405 million, up from USD$258 million a year earlier.

 

The carrier said operating revenue declined 0.9 percent to USD$3.4 billion. Northwest ended the quarter with USD$3.1 billion in unrestricted cash.

 

The airline industry, recovering from a years-long downturn, has been battered by high fuel costs and low-fare competition.

 

Strategic fuel hedging and fare increases have given some stability to the embattled industry. Northwest's fuel costs declined 7.9 percent for the quarter.

 

Northwest said its operating expenses declined 4 percent to USD$2.9 billion, while average fares gained 2.1 percent.

 

Northwest Chief Financial Officer Dave Davis said that bookings remain strong in the fourth quarter and that there is no evidence of slowing demand.

 

The carrier said it expects costs per seat mile to rise by between 2.5 percent and 3.5 percent in the fourth quarter with a reduction in the number of available seats down 2 percent to 3 percent. The airline said the bulk of the capacity reductions will be on domestic routes.

 

On more lucrative international routs, Northwest said it intends to increase capacity 2 percent to 3 percent.

 

The airline said it expects to pay USD$2.40 per gallon of jet fuel in the fourth quarter.

 

(Reuters)

 

Korean Air Q3 Profit Beats Forecast

 

October 30, 2007

Korean Air on Tuesday reported a better-than-expected quarterly operating profit, fueled by higher traffic and a firmer won currency against the dollar.

 

Korean Air is set for a smooth flight in the coming quarters as travel demand should stay robust in Asia's fourth-largest economy and as a stronger won will cut the cost of importing fuel and servicing dollar-denominated debt.

 

That won strength is likely to offset skyrocketing oil prices, while the government is also considering allowing Korean Air to increase fuel surcharges and pass on to passengers the impact of rising costs.

 

On Monday, the won hit its strongest level versus the dollar in more than 10 years on lingering expectations for interest rate cuts by the US Federal Reserve.

 

Korean Air earned an operating profit of KRW281.4 billion won (USD$310.4 million) in the third quarter ended September 30. That compared to KRW193.8 billion a year ago and KRW75.4 billion in the previous quarter.

 

The rise was fueled by an 8.1 percent increase in sales as international passenger revenue, which accounts for more than half of the company's sales, rose 10 percent and cargo sales gained 6.3 percent.

 

Korean Air reported KRW131.7 billion in net profit for the third quarter, below a KRW142.7 billion profit forecast, as the company saw a 74 percent fall in non-operating income.

 

That compared to a KRW126.8 billion won profit a year earlier and a KRW214.4 billion won loss in the previous three months, when the company was hit by USD$300 million in fines for its role in a price-fixing conspiracy.

 

Korean Air used 7.7 percent more fuel in the July-September period from a year ago while fuel costs, the company's single-biggest cost item making up 30 percent of its operating expenses, rose 4.9 percent.

 

South Korea's demand for international flights is expected to rise on the won's strength, which will cut overseas travel expenses, and on the possibility the US government could include South Korea in its visa waiver program, analysts say.

 

(Reuters)

 

 

 

[Pieter C. 5]

The soap is continuing !!!

 

Italian Bank Looks At Alitalia Deal

 

November 5, 2007

One of Italy's biggest banks, Intesa Sanpaolo, is looking at a plan to combine struggling national airline Alitalia with smaller Air One and take a minority stake.

 

Alitalia has been on the block for 10 months and is now in talks with several possible investors including Air One and three foreign airlines, after the government's efforts to sell it and keep its Italian roots collapsed in July.

 

Intesa, which backed Air One in the auction, has since expressed hope that the deal could be back on. Intesa's chief executive, Corrado Passera, said just last week such a move could turn the loss-making airline around.

 

A domestic solution would echo Intesa's deal with investors including investment bank Mediobanca and insurer Generali earlier this year to keep Telecom Italia under Italian control.

 

The three got together with the Benetton family and Spain's Telefonica to buy a controlling stake in the former telecoms monopoly from Pirelli and are now in the process of appointing their choice of senior managers there.

 

Although for Alitalia, all options are open in the latest round of talks, according to a financial source, the airline said last month that shortlisted private equity fund TPG was not able to form a sufficiently Italian-based group.

 

Another mostly Italian group of investors has been asked to prove it has sufficient funds to take on the airline, which loses more than EUR1 million euros a day.

 

That leaves Alitalia's long-time commercial partner Air France-KLM, Germany's Lufthansa and Russia's Aeroflot also on the shortlist drawn up by advisers at Citigroup for talks.

 

Italian newspapers have speculated Air France-KLM would be the partner of choice for Alitalia but the courtship has not yet taken off and Alitalia's chairman, Maurizio Prato, has denied any pressure to pick the French-Dutch company.

 

Air France-KLM has said in the past Alitalia must shape up on finances before it would be interested.

 

Italy's biggest bank, UniCredit, backed Aeroflot in the government's auction but has not yet shown its hand this time around. Aeroflot has said it is ready to borrow up to EUR1 billion for a bid.

 

Alitalia, which is worth about EUR1.24 billion (USD$1.8 billion), needs to find a partner to avoid hitting a dead end, Prato says, and he is trying to push through a survival plan that will cut flights and costs while filling more empty seats.

 

The airline is hoping to come up with a preferred bidder by mid-November, a trade union source said last month.

 

But an Italian solution for Alitalia might not be easy for Intesa to strike. It has crossed swords with Mediobanca over the investment bank's key role in Generali -- a shareholder and commercial partner -- now that Intesa's only serious domestic rival, UniCredit, tops Mediobanca's investor list.

 

(Reuters)

 

[Pieter C. 5]

Alitalia Says Consortium 'Incompatible' With Bid

 

November 8, 2007

Alitalia said a consortium led by an Italian lawyer had not provided proof that it meets the financial requirements to bid for a stake in the airline, making it "incompatible" with the sale process.

 

A 49.9 percent stake in Alitalia has been for sale for 10 months. The airline is now in talks with several possible investors including smaller domestic rival Air One, Air France, Lufthansa and Aeroflot, after a government auction collapsed in July.

 

A consortium led by lawyer Antonio Baldassarre and made up of mainly Italian investors was also among the potential bidders, but Alitalia had said it would start talks with the group only after it proved it had the required financial means.

 

(Reuters)

 

[Seng Lim 0]

China Southern Officially Joined Skyteam on today and became the 11th Full Members.

 

http://www.skyteam.com/EN/aboutSkyteam/pre...er/pr151107.jsp

[Pieter C. 5]

The Alitalia saga continues:

 

Alitalia Expects To Name Bidders By Dec 6

 

November 29, 2007

Alitalia has postponed by about a week to December 6 a deadline for non-binding offers for Italy's ailing airline.

 

Its adviser, Citigroup, has a short-list of potential investors including Air France-KLM, Lufthansa and domestic carrier Air One. Russia's Aeroflot pulled out last week.

 

"Contacts and discussions with the subjects involved are still being pursued," it said in a statement after a board meeting on Wednesday. "Consequently it is foreseen that any possible proposals should be made by 6 December."

 

Alitalia also said it would identify the candidates by the deadline.

 

Last week, it said its board could meet in the first half of December to choose one of them for exclusive talks.

 

Lufthansa will decide by the end of the year whether to make a bid, its chief executive Wolfgang Mayrhuber said in a newspaper interview on Sunday.

 

"Alitalia has big and barely manageable problems. We are studying whether we can find a recipe (to handle these) and make a bid," he told Frankfurter Allgemeine Sonntagszeitung.

 

Alitalia has a market capitalization of about EUR1.2 billion euros (USD$1.78 billion) and loses a million euros per day.

 

Prime Minister Romano Prodi's government had to abandon its own attempts to sell the state's 49.9 percent stake in July when all bidders pulled out.

 

Both Air France-KLM and Lufthansa snubbed the auction because they did not like the terms.

 

(Reuters)

 

[Pieter C. 5]

Delays Throw Doubt On Foreign Saviors For AlitaliaDecember 4, 2007 A series of delays in self-imposed deadlines by Alitalia to identify a partner signal a struggle to put a palatable offer forward for the strike-prone flagship carrier -- and the odds of a foreign partner are lengthening.On the block for nearly a year, the loss-making Italian carrier is in its second push to find a buyer after an auction for the Italian Treasury's 49.9 percent stake collapsed in July.This time around, the airline, with a market value of EUR1.1 billion euros but debt of about EUR1.2 billion, drew up its own list of six potential suitors after being instructed by Italy's government to find a buyer by the end of the year.But that list is quickly shrinking, while Alitalia has delayed a deadline for non-binding offers to December 6 after promising a partner would be found in early November.Its ailing finances -- it loses over a million euros a day -- and strike-prone unions have long dissuaded bidders."It's a sign that a deal just can't be found," said Giacomo Chiorino, a fund manager at Nuovi Investimenti Sim. "It's been more than a year that they've been trying to find a buyer and a deal is almost becoming a non-starter at this point."Analysts say Alitalia's fate now comes down to four options. A bid by larger rivals Air France or Lufthansa favored by the Italian government for having the muscle to restore their national carrier to health; a more likely alliance with domestic rival Air One or eventually being liquidated if it can't find a partner.From Alitalia's initial list of suitors, one group was ruled out for lack of evidence of financial strength, while Russian airline Aeroflot -- backed at one time by Italy's biggest bank UniCredit -- and US equity firm TPG both pulled out.Air France and Lufthansa meanwhile have shown lukewarm interest and say they have yet to decide but the two European airlines may have been dissuaded from bidding by British Airways' decision to pull out of the battle for Spanish airline Iberia, said Oliviero Baccelli at Bocconi University's transport economics research centre.That has eased pressure on the French and German carriers to pull off a similar deal."Air France and Lufthansa were waiting for the resolution of Iberia's fate and now that that has been solved, there will be no offer from them," he said.Both European carriers are still expected, however, to keep abreast of the action and meet the December 6 deadline, along with domestic carrier Air One -- a commercial partner of Lufthansa.On Tuesday, Lufthansa CFO Stephan Gemkow said the company could not ignore Italy, one of the biggest business travel markets where Alitalia's trump card is its dominance of the lucrative route from financial capital Milan to Rome.Italian Prime Minister Romano Prodi's fragile centre-left government must balance union intolerance of any sweeping job cuts with the need to get rid of the albatross that Alitalia has become now that the European Union has vetoed further state aid."For Lufthansa and Air France, the best scenario for them would be to see Alitalia fail and then take the pieces but politically that's not possible," said Alessandro Frigerio, a fund manager at RMJ, which sold its Alitalia stock this year.Alitalia has had to repeatedly row back on promises that a deal is around the corner. Its shares dropped 9 percent in November over fears the sale would be delayed to 2008, despite denials by Italy's government.In early October, the airline's Chairman Maurizio Prato told lawmakers he was confident of finding a buyer within the first 10 days of November. When that date passed, Italy's transport minister said the choice would be made by November 23.Alitalia then said non-binding offers were expected by the end of November and it would identify a partner for exclusive talks by mid-December. Last week it delayed the deadline for offers to December 6.Now, signs are that Air One could end up with Alitalia despite doubts it can pull off a deal for a much larger airline with much bigger problems, analysts say."All these delays were related to the fact that the Italian government would like to receive an offer from Air France and Lufthansa," said Baccelli. "At this point, they cannot postpone the decision anymore or Alitalia will continue to suffer."Air One could allay fears over its financial strength thanks to the backing it has from Italy's biggest retail bank Intesa Sanpaolo, which has said it could also take a minority stake. Goldman Sachs is also advising the airline.And analysts do not rule out Air One finding support from Lufthansa and UniCredit, which has said it is still watching the situation after Aeroflot quit."It could end up being a typical Italian solution with the banks involved," said Chiorino. "They did this with Fiat and with Telecom Italia and it's possible that it will happen with Alitalia as well."(Reuters)

 

Lufthansa Decision On Alitalia Remains OpenDecember 5, 2007 It remains open whether Lufthansa will decide on Wednesday on a possible non-binding offer for Alitalia, a person familiar with the situation said.The topic was so far not on the agenda of a meeting of Lufthansa's supervisory board due to take place later in the day, people familiar with the matter said.But management at the German carrier could make a decision on a non-binding bid without getting it rubber stamped by the supervisory board.A Lufthansa spokeswoman repeated that the airline had not yet decided on an Alitalia bid."We are monitoring the situation and have not yet made a decision on an offer," she said, reiterating comments made on Tuesday by Lufthansa finance chief Stephan Gemkow at an aviation conference in Munich.The spokeswoman also declined to comment on the supervisory board."We do not comment on meetings or topics of the supervisory board meetings," she said.Italy's MF newspaper said without quoting sources that Lufthansa's supervisory board would give its final opinion on an offer for Alitalia at the Wednesday meeting.Strike-prone Alitalia, which has been on the block for almost a year, is in its second push to find a buyer after an auction for the Italian Treasury's 49.9 percent stake collapsed in July.The loss-making carrier has delayed a deadline for non-binding offers until Thursday, December 6 after promising a partner would be found in early November.Lufthansa Chief Executive Wolfgang Mayrhuber said earlier this year that Lufthansa would not hang a financial "millstone" around its neck that would weigh on its finances.(Reuters)Air France-KLM Makes First Move On AlitaliaDecember 6, 2007 Air France-KLM kicked off a round of non-binding offers for Italian flag carrier Alitalia on Thursday, with rival airlines Lufthansa and Air One expected to follow suit.Air France-KLM said it was sending a non-binding letter of interest to Alitalia on Thursday, which will be submitted to the Italian carrier's board of directors.Air France-KLM, a long-standing code-sharer with Alitalia and touted as an ideal partner by the Italian press, said in a statement: "This major step in European consolidation would not only be beneficial for passengers but would also meet the requirements for the group's economic and financial stability, including its target of a return on capital employed after tax of 8.5 percent by the end of fiscal 2009/2010."Alitalia's board meets at 1700 GMT and should look at the offers that adviser Citigroup puts forward, nearly a year after it first went on the block.(Reuters)

[Pieter C. 5]

Delta Could Spark Mergers - US Air CEODecember 6, 2007 Delta Air Lines could trigger a much-needed wave of airline consolidation, the chief executive of rival US Airways said on Wednesday.Speaking at the Reuters Aerospace and Defense Summit in Washington, Doug Parker, who tried and failed to merge his airline with Delta, reiterated his view that the overcrowded industry is in desperate need of consolidation.He added, however, that Delta, despite earlier resistance to consolidation, is uniquely positioned to be the catalyst for what could be a wave of airline mergers."Delta will be the trigger if they want to be," said Parker, who engineered the 2005 merger of America West and US Airways. "When they decide to do something, that will be the trigger."Parker and other airline leaders see industry consolidation as a way to cut costs and capacity and stabilize the volatile industry. A common view is that if two of the big airlines merge, others will scramble to find partners of their own.US Airways made a hostile takeover bid in 2006 for then-bankrupt Delta. Delta rejected that bid in January, saying it was more valuable as a stand-alone company.Since then, there have been no public merger proposals by major airlines, although speculation swirled last month that UAL, parent of United Airlines, and Delta were in talks. Delta denied it but said it had hired advisers to help it explore strategic options that could include mergers.The US airline industry is recovering from a years-long downturn triggered in part by low-fare competition and exacerbated by soaring fuel prices. In 2006, the industry began cutting the number of seats for sale and raising fares.But trouble is on the horizon for the industry as the US economy softens and high oil prices, which hit record levels in recent weeks, drive up the cost of jet fuel. Some industry leaders also believe travel demand -- mainly business travel -- could buckle under the weight of a softening US economy.Mergers could be a way out of the industry's looming troubles, but so far, it's just talk.But Parker believes that will change. He said Delta's the likely trigger because US Airways and Northwest Airline are too small to kick start the process, while United is willing but has been unable to pull off a deal.Meanwhile, American Airlines parent AMR and Continental Airlines appear unwilling to initiate the process.While Parker believes consolidation will come, he said that if airlines do not make merger proposals by early 2008, they likely will have to wait.A new presidential administration in early 2009 will need time to fill positions at the US Department of Justice, which could result in costly delays in the approval process."There is a bit of a timing issue in that there is going to be a change," Parker said. "If there is not something announced very early in '08, I think you will see everything put on hiatus."US Airways said on Wednesday that its passenger revenue per available seat mile increased between 2 percent and 4 percent in November, which was seen as weak by Wall Street and US Airways and could be an early sign of demand weakness."We believe this is a disappointing result relative to street expectations," said Kevin Crissey, UBS airline analyst.Parker agreed the November results were "lower than we would have liked." He warned that a weaker US economy may dampen travel demand and that fuel costs are likely to remain a major burden for airlines."I do think 2008 is going to be a difficult year," Parker said, adding that airlines are better prepared to survive an economic downturn today than they were in years past."I think the definition of a difficult year in our business has gotten more manageable," he said.(Reuters)

 

Air France, Air One Join Alitalia BiddingDecember 7, 2007 Air France-KLM offered to buy Alitalia on Thursday after a year of apparent indifference, setting up a showdown with tiny Italian airline Air One for the money-losing Italian carrier.The winning bidder for Alitalia, which loses a million euros (USD$1.5 million) a day, would take on an airline beset with strike-prone unions, inefficiency and political interference. It has been on the block for about a year.Germany's Lufthansa walked away from the sale of the Italian state's 49.9 percent stake ahead of Thursday's deadline for non-binding offers, saying an offer could have put its investment-grade debt rating at risk.A little-known group led by Italian lawyer Antonio Baldassarre also presented an offer, which Alitalia said it would evaluate despite previously ruling out the group for failing to show it had the necessary financial muscle."Alitalia is unprofitable, it is a liability, but for an airline like Air France it also means they can add to their network, routes and slots," said Diogenis Papiomytis, aviation consultant with Frost & Sullivan. "By buying Alitalia, you're buying a set of routes around the world."Alitalia said it would likely identify a bidder for exclusive talks next week.The bids leave Italy's government with two vastly different options in Air One and Air France-KLM, each with problems of their own.An Air One takeover would keep Alitalia in Italian hands, but there has been doubt over whether the smaller airline has the ability to turn around an airline with a long list of woes.The Air France-KLM choice would make Alitalia part of the world's biggest airline by sales but at a sharp discount to its share price with the possibility of job cuts.The Franco-Dutch airline's proposal will be well below Alitalia's market value of 1.1 billion euros, a source familiar with the matter said. Air France-KLM has emphasized it would not do a deal that would dent its profitability.Shares in the Italian airline jumped more than 6 percent to a one-month high after Air France-KLM said it was sending a non-binding letter of interest to the company's board, before closing up nearly 3 percent at 0.87 euros.The stock had tumbled 9 percent last month on fears that Alitalia, which has about 1.2 billion euros in debt, would attract only Air One, and the sale would be delayed to next year.Air One said it would invest 4 billion euros in Alitalia, mainly to renew its aging fleet. Under its plan, the airline would maintain twin hubs in Rome and Milan, and aimed to break even by 2009 with a profit the following year.Air One is the only name left from an earlier failed attempt to auction Alitalia. It is backed by top banks Intesa Sanpaolo, Morgan Stanley, Nomura and Goldman Sachs.In contrast to Air One, Air France-KLM said it aimed to develop a business plan in line with Alitalia's latest "survival" plan unveiled in August that would scale back the airline's presence at Milan and focus on its Rome hub.It said it would be "counting on the support of the Italian carrier's entire work force." Alitalia is known for its strong unions that have staged crippling strikes to thwart management efforts to cut jobs.Air France said an Alitalia bid would meet requirements for its economic and financial stability, but added it continued to consider a deal to buy Spain's Iberia.Air France has been tipped as a suitor for Alitalia since a marketing agreement struck in 2001 and a share-swap deal the following year. But it played down talk of a bid over the past year, saying Alitalia should first sort out its myriad problems.Italian Prime Minister Romano Prodi has said Alitalia should go to the best bidder, with Italian ownership a secondary issue.(Reuters)

 

Contest For Alitalia Tests 'Italian Solution'December 8, 2007 The battle to buy Alitalia will turn on whether the ailing airline prefers an Italian solution appeasing unions and politicians, or the stronger prospect of a turnaround offered by joining a larger rival, analysts say.After a year on the block, Alitalia on Thursday received offers from Air France-KLM and domestic rival Air One for the 49.9 percent stake held by the Italian state.A third offer from a group led by an Italian lawyer may not proceed since it was ruled out by Alitalia previously for not proving it had the funds to pull off a deal.Alitalia is expected to identify a bidder for exclusive talks next week and analysts say the choice is far from obvious.The Air One choice is seen as politically expedient, but Air France with its financial muscle and rigorous approach is seen by some analysts as more likely to restore Alitalia to long term health."With this decision we will see whether they are working for the short-term or the long-term," said Nicolo Nunziata, analyst at J&C Associati in Milan. "The meaning of this decision will be important -- Air France would be a move for the long-term and Air One for the short-term."The price offered is expected to play a less decisive role because Alitalia's losses and inefficiency mean it is unlikely to garner bids anywhere close to its 1.1 billion euro market value, analysts say. It also has 1.2 billion euros in debt.Analysts also warn that having two serious bidders in the fray does not mean a deal will be sealed and the sale could yet fall apart again, just as a previous auction did in July.Air One is likely to be preferred by unions and politicians as it would keep Alitalia in Italian hands and ensure the politically useful -- but expensive -- strategy of keeping twin hubs in Rome and Milan is continued.Alitalia's decision in August to scale back its Milan hub set off a storm of protests from regional politicians. Air One says it will maintain the two hubs, while Air France says it will ditch the Milan hub to focus on Rome.But analysts raise doubts about Air One's ability to turn round an airline that loses more than a million euros a day or whether, as an Italian company, it can sidestep the same political interference that plagued Alitalia.Despite its global ambitions, Air One is dwarfed by Air France-KLM. The world's largest airline by sales is 37 times larger by revenue and its aircraft fleet is 10 times bigger.Air One has tried to counter doubts by promising to invest 4 billion euros in Alitalia and winning the backing of top banks including Intesa Sanpaolo, Goldman Sachs, Morgan Stanley and Nomura. It has also played up its Italian credentials and says its plans are for the long term."They are very convinced on this deal and they need it to survive," said Oliviero Baccelli at Bocconi University's transport economics research centre.Still, analysts say a deal with Air France-KLM is the safer bet for Alitalia to stem the bleeding that has brought it close to bankruptcy before and led its chairman to call it "comatose"."Air France-KLM are the most suited investor to take over Alitalia, more so than Lufthansa because they've gone through the process of merging two totally different airlines," said Diogenis Papiomytis, aviation consultant at Frost & Sullivan.Air France has also made it clear it will not do a deal that leaves it short of its profit and return targets and analysts expect it to be more aggressive than Air One in cutting jobs and streamlining the airline -- both politically uncomfortable.But Italy's persistent failure to turn around Alitalia may mean it is time to leave it to a new player, says Nunziata. "If the old road is always wrong, try a new one," he said.(Reuters)

[Pieter C. 5]

Air France Says Alitalia Merger 'Will Be A Success'

 

December 11, 2007

An offer by Air France-KLM for loss-making Alitalia would bring the Italian airline back to profitability and reinforce its role as a national carrier, Air France-KLM's chairman said on Monday.

 

In a statement released in Rome, Jean-Cyril Spinetta, who is also the company's chief executive, said he was confident that the merger with Alitalia "will be a success".

 

The statement did not specify how long it would take to turn around Alitalia and did not mention the company's work force.

 

Air France-KLM submitted its bid for the 49.9 percent stake in Alitalia held by the Rome government last week, alongside smaller Italian airline Air One and a little-known consortium led by an Italian lawyer.

 

Alitalia's chairman said in an interview at the weekend the French airline's business plan for Alitalia was clearer than that of Air One.

 

The CEO of Bank Intesa Sanpaolo, which is backing Air One's bid, said on Monday that selling Alitalia to Air France KLM would be like "throwing it away".

 

Alitalia has been on the block for a year, and a government auction failed in July. Alitalia's board is expected to identify a bidder for exclusive talks this week. The board's decision will then be put to the government.

 

(Reuters)

 

[Pieter C. 5]

Italy Takes More Time To Pick Alitalia Buyer

 

December 13, 2007

Italy's government did not pick its preferred candidate to buy Alitalia as expected on Wednesday, leaving both Air France-KLM and domestic rival Air One still in the fray to buy the ailing airline.

 

After an intense media buildup to the high-level government meeting billed as decisive for Alitalia's fate, Italy's transport minister played it down as just a discussion of ideas.

 

"It was a meeting with an exchange of thoughts, there will be others in coming days," Alessandro Bianchi told reporters after it ended just before 11 pm local time (2200 GMT).

 

It came hours after he told Italian radio that Prime Minister Romano Prodi and his senior ministers would decide on Wednesday on a buyer for the money-losing airline Italy has hawked for a year. Other ministers who attended departed without saying a word.

 

Alitalia's board is set to meet on Thursday. But it is unclear if it will identify a bidder for exclusive talks as planned since it was expected to rubber-stamp the choice made by the government, which owns 49.9 percent of the airline.

 

Air One, run by Italian businessman Carlo Toto and backed by the country's biggest retail bank, Intesa Sanpaolo, is the favorite of state-owned Alitalia's troublesome unions, regional politicians and business leaders.

 

But Air France-KLM, the world's largest airline group by revenue, is seen by analysts as having the strategic savvy and financial clout to pursue long-term restructuring at Alitalia, which bleeds over 1 million euros a day.

 

A third offer for the airline from a little-known group advised by an Italian lawyer is not expected to pose a threat, as it was ruled out last month for lack of funds.

 

Despite Alitalia's financial woes, the airline has the attraction of its dominance of the lucrative route for business travel between Milan and Rome.

 

Analysts say political interests and strategic considerations will play a greater role in the final decision than the price offered, which is expected to be well below Alitalia's EUR1.1 billion market value.

 

It also carries EUR1.2 billion of debt.

 

The airline has said it would have enough money for the next year if it sold assets -- which is just as well, as the European Union earlier this year banned any more state aid.

 

Italy put the airline up for sale in December last year and in a first auction for the state's stake, the government stipulated that any buyer would have to retain Alitalia's Italian identity. But Prodi has now said Alitalia should go to the best bidder, with Italian ownership a secondary issue.

 

And Alitalia Chairman Maurizio Prato has said Air France's plan appeared clearer than that of Air One and more closely mirrored his own ideas for restructuring the airline.

 

The winning bidder would have to launch a tender offer for all Alitalia shares after completion of talks with the airline, a government source said.

 

That means the losing bidder in this round could still return to the game by launching a superior counter-bid at that stage, the source said.

 

Air One has said that it would cut about 3,700 jobs and that investment banks backing its bid -- which aside from Intesa include Goldman Sachs, Morgan Stanley and Nomura -- could take stakes in Alitalia.

 

Fewer specifics are known on Air France's offer, although the Franco-Dutch carrier has said its intentions echo those of the Italian airline's own restructuring plan unveiled in August.

 

Shares of Alitalia closed up nearly 3 percent at 0.88 euros ahead of the government meeting.

 

(Reuters)

 

[Mohd Azizul Ramli 2]

It has been announced that the Taiwan's flag carrier, China Airlines will become the 12th full member of SkyTeam Alliance later this year.

 

CI has been in negotiation with SkyTeam since Autumn 2007. As a comparison, MH has approached SkyTeam earlier in 2006 but was not entertained.

 

With this new development, chances for MH to become a member of SkyTeam can be considered as dim because CI is well position to cover the South East Asia region for SkyTeam. With AF eyeing another South East Asian carrier, VN, we can only hope for a 'miracle' if MH were to be in this Alliance.

 

Another related event is that OneWorld is also going to announce their 11th member soon. Although no clear picture on what airlines will it be, rumours are spreading that it is going to be Brussels Airlines. Or will it be our beloved MH? Neeh...

[Azuddin 1]

Great news. Congrats to CI

 

Azuddin

[Keno Omar 0]

The bigger problem would be AF with its precious codeshare with QF via SIN. Perhaps when AZ takeover is finalized, they might see some senses since both KL and AZ are now partners of MH.

Edited January 18, 2008 by Keno Omar

[KK Lee 5]

The bigger problem would be AF with its precious codeshare with QF via SIN. Perhaps when AZ takeover is finalized, they might see some senses since both KL and AZ are now partners of MH.

 

How much value can MH add to ST or AF? If MH is careless, AF may request KL to move its Aussie traffic to QF/SIN.

 

 

[Keno Omar 0]

How much value can MH add to ST or AF? If MH is careless, AF may request KL to move its Aussie traffic to QF/SIN.

Sadly, Aussie market is all that MH has left to offer. CZ/KE has China fully covered, european airlines are racing to introduce direct flights to India, while CI/VN would have a good portion of SE Asia covered.

 

MH is lucky that even after the takeover, KLM still maintains its Aussie traffic via KUL. It seems that nothing is preventing them to follow in the way of AF via SIN/QF. KLM has daily flights to both KUL & SIN, add AF codeshare they have a 2nd daily to SIN. On the other hand, one could be optimistic and see this as a sign that AF might possibly still be interested in MH, or else they would have burnt the bridge years ago.