Air France 2009 Annual Report Download - page 29

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A strategic agreement with Alitalia
Air France-KLM chose to step up its
cooperation with Alitalia through an operational
partnership agreement, cemented with a 25%
equity stake in the Italian company in return for
€323 million on March 25, 2009. This operation
has significant advantages for the two groups.
Air France-KLM gains access to the Italian
market, the fourth-largest in Europe, alongside
a restructured and financially sound partner
with a strong presence in its domestic market
following the merger with competitor Air One.
For its part, Alitalia has access to the leading
network linking Europe to the rest of the world
thanks to the dual hub system whose reach
into southern Europe is extended by this
partnership.
Significant synergies
The two agreements signed by Air France-KLM
in early 2009 are the source of some significant
synergies.
In addition to its extensive scope and the
attractive offer it represents for customers,
the joint-venture with Delta will enable more
rationalized use of the fleet and thus a
reduction in production costs. In total, the
Group is anticipating synergies of around
$150 million.
The main aims of the closer cooperation with
Alitalia are to strengthen the latter’s positioning
in the business customer segment, to share
best practices and to develop the joint ventures
between Air France and Alitalia and KLM and
Alitalia. The two partners have estimated the
potential synergies at €370 million, of which
€160 million for Air France-KLM.
Fabrice Knoll:
Is consolidation also a
response to the crisis?
One of the industry responses to the crisis
in air transportation effectively consists
of restructuring and mergers to increase
competitiveness, a trend taking place on
both sides of the Atlantic. The merger
between Delta and Northwest gives this
major a 21% share in the US, the leading
air transport market world-wide. In Europe,
consolidation is taking place via the merger
of airlines in their domestic markets, like
Vueling and Clickair in Spain or Alitalia and
Air One in Italy, via the strengthening of
multi-national networks with the acquisition
of Brussels Airlines, the British airline bmi
and Austrian Airlines by Lufthansa, and by
the planned merger between British Airways
and Iberia. The purchase of an equity
stake in Alitalia by Air France-KLM and the
acquisition of Martinair by KLM are also part
of this trend.
27
Air-France KLM - Annual report 2008-09