Airline pays €323m for minority holding
Air France KLM has paid Alitalia €323m for a 25% stake in the Italian national carrier.
The purchase was completed before a re-vamped and streamlined Alitalia was re-launched today (January 13).
The deal with AF KLM ends a three month battle between the French-Dutch interest, Lufthansa and, to a lesser extent, BA fought for a stake in Europe's fourth largest travel market.
Under the agreement, AF KLM will own 25% of the capital of Alitalia, have three nominees on the 19-strong board and two places on the nine strong executive committee of the board.
A lock up deal also means that Italian shareholders in the airline will not be able to transfer their holding to either the Italian shareholder group or AF KLM for four years until January 13, 2013.
Both airlines predicted substantial synergies from the tie up.
Alitalia said it expected €720m over the next three years from network optimisation and revenue management.
AF KLM said it estimated its synergies at about €90m by year two or three at the EBIT (earning before income tax) level.
In a joint statement, AF KLM/Alitalia said the deal would give it "greater access to the Italian market thanks to Alitalia which, following its acquisition of Air One, has reinforced its position on the domestic market.
"It also links Alitalia to the world's leading air transport group, thereby offering its passengers access to the most powerful network linking Europe to the rest of the world.
The statement said the two airlines would continue to operate from Paris Charles de Gaulle, Amsterdam Schiphol, Milan Malpensa and Rome Fiumicino "on an equal basis."
Jean-Cyril Spinetta, chairman and Pierre-Henri Gourgeon, ceo AF KLM, said: "In view of the numerous challenges facing our sector, cooperation 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."
Roberto Colaninno, the new chairman of Alitalia, and Rocco Sabelli, the airline's ceo, said: "We are delighted with the agreement reached between Alitalia and Air France-KLM.
"This is a highly innovative and ambitious alliance with important industrial implications.
"It has been built around Alitalia's strong potential for growth over the coming years and on the quality of the Italian shareholders' entrepreneurial project.
"The agreement represents an important milestone in the history of Italy's flag carrier offering, as it does, three great opportunities: growth for Alitalia, increased competitiveness for Italy and an effective service for all Italian air travellers."
Mr Sabelli later described AF KLM as the "best solution" compared to the alternatives offered by Lufthansa and BA.
He said Lufthansa "showed interest in the Italian market but never in a concrete project for a new Alitalia" while BA never wanted to make a "real investment."
The ceo said AF KLM was regarded by most as the natural choice owing to both its membership in SkyTeam and its antitrust immunity with Alitalia on transatlantic routes.
He said the carriers have partnered each other on joint ventures on routes between France and Italy since 2002.
AF KLM launched a take over bid for Alitalia last year with the backing of the then Italian government of Romano Prodi.
But this had been scuppered by the new prime minister Silvio Berlusconi and the unions at Alitalia.
The airline, which filed for bankruptcy in August, was eventually bought by CAI, a consortium headed by Mr Colaninno.
The airline has since been merged with rival Air One, cut its workforce and reduce its network.
The first flight under its new owners left London today at 6am bound for Rome.
www.alitalia.com www.airfracne.com www.lufthansa.com