Air France approves KLM merger
Air France’s board approved plans to acquire rival Dutch airline KLM, a board member said. The union would create one of the world’s largest aviation partnerships.
The alliance would go significantly deeper than traditional commercial partnerships. Plans call for the airlines, Europe’s second- and fourth-largest, to unite beneath the same corporate umbrella, but stop short of a full merger.
Yvon Touil, a union official who sits on Air France’s board, said he voted against the proposed link-up yesterday. He said the French carrier is making too many concessions to acquire indebted, loss-making KLM.
The price “is exorbitant. We are overpaying. It is too expensive”, said Touil, of the Communist-linked CGT union. “Everyone on the board underlined - even the people who voted in favour – that the financial risk is enormous.”
He declined to give details on the plans, but said the board had approved a letter of intent that will be given to KLM’s board, which also met separately last night.
“There’s no deal yet,” said KLM spokesman Bart Koster, noting that the Dutch board still needs to approve the union.
Air France will release further details today, Touil said after the French board meeting that lasted more than three hours.
The proposed union, the first between major European carriers, comes as many airlines are seeking to survive a downturn in travel that followed the September 11, 2001, terrorist attacks.
Major airlines are also being squeezed by no-frills rivals like Ryanair and easyJet.
Air France and KLM expect the union to save them £345m (€495.6m) a year, primarily in reduced purchasing, maintenance and administration costs, Touil said.
He said major decisions regarding Air France-KLM fleets, networks and alliances will be decided by an eight-person management committee with four people each from the Netherlands and France.
Italy’s flagship carrier Alitalia, which has a minor stake in Air France, gave its blessing to the proposed union.
Alitalia already has a commercial partnership with Air France and has said in the past that it wants to join a three-way alliance with KLM to help it increase productivity and remain competitive.
