Air France in talks with Alitalia to acquire carrier
Executives of Franco-Dutch group met Italian commissioners to discuss joining auction
Air France-KLM has held talks with Alitalia about entering the race to acquire the ailing Italian flag carrier, a decade after its efforts to purchase its peer were scuppered by political opposition.
According to people familiar with the matter, Alitalia’s government-appointed commissioners met AF-KLM executives in Paris last week to discuss the Franco-Dutch airline’s interest in joining the auction, possibly through a joint bid with easyJet, the British low-cost carrier.
AF-KLM’s arrival on the scene marks a new twist in the long-running saga surrounding the fate of Alitalia, turning control of Italy’s skies into a key battleground in the European airline sector.
The Italian airline collapsed into bankruptcy last year, after employees rejected a deal on salary and benefits proposed by the company, in which Etihad, the UAE-based carrier, had a big investment.
Now under government control, the airline has been trying to draw out potential buyers, but struggled to find a palatable option. A potential joint offer from AF-KLM and easyJet would join Lufthansa, the German airline, and Cerberus Capital Management, the private equity group, as the most likely contenders to buy Alitalia.
This month, AF-KLM denied that it had already made a bid for Alitalia, but it did not rule out any interest in doing so in the future. People familiar with the situation say that AF-KLM may be feeling squeezed between Lufthansa and IAG, which owns British Airways and has a foothold in Italy through Vueling, the Spanish low-cost airline, so it may not want to sit out the Italian contest.
However, AF has already been scorched by a previous attempt to buy Alitalia in 2008, which was scuppered by political opposition as the centre-right government led by Silvio Berlusconi at the time pushed for an all-Italian rescue of the airline instead.
“I don’t think the past experience of either KLM or Air France in their relations with Alitalia encourages us to repeat the experience of a direct presence in Italy,” Jean-Marc Janaillac, AF-KLM chief executive, said last year.
However, he left himself some room for manoeuvre when he said AF-KLM would “watch what happens” with the commissioners, and “adjust our position accordingly”.
Alitalia — and the Italian government — had hoped to get the sale wrapped up by the end of last year, but the offers that came in late 2017 were not considered sufficiently strong to merit any kind of exclusive negotiation, let alone a formal deal.
This prompted the commissioners to engage in a new set of talks with potential buyers, including AF-KLM, which was granted access to Alitalia’s data room after last week’s meeting, but also Delta Air Lines, the US airline, which acquired a 10 per cent stake in the French airline last year.
Lufthansa has already said its bid was contingent on assurances that Alitalia would implement deep cuts under the commissioner’s leadership. According to Reuters, Carsten Spohr, Lufthansa chief executive, said there was still “a considerable amount of work” to do on the restructuring front before a takeover by the German airline could be viable in a letter to Carlo Calenda, Italy’s economic development minister, this month.
The entry of AF-KLM into the picture means that it could still take weeks — if not months — for Alitalia’s commissioners and the government to settle on the best offer, entering into exclusive talks with a single buyer. Most likely, this means the fate of Alitalia will be decided after the general election in Italy, set for March 4.
Alitalia and AF-KLM declined to comment.