MILAN, 2 October 2003 — Alitalia’s CEO said yesterday he hoped the Italian airline would join a planned merger of Air France and KLM around the same time they launch Europe’s new largest airline company in April 2004.
“We hope to get on board by April 2004,” Francesco Mengozzi told newspaper Corriere della Sera in an interview when asked about the timing of Alitalia joining the new merged airline.
In an interview with financial daily Il Sole 24 Ore, the CEO said he hoped Alitalia would “be ready” to join by April. Air France and KLM on Tuesday unveiled a plan to create what would become Europe’s No. 1 airline via a merger they plan to complete via a 784 million euro ($915 million) share-swap offer ending next April.
A new holding company to be called Air France-KLM will maintain Air France’s stock listing and will operate the two carriers as separate units — a structure aimed partly at maintaining their country-to-country flying rights.
Air France Chairman Jean-Cyril Spinetta on Tuesday declined to say when Alitalia might join the merger. Analysts have said Air France and KLM might want to focus on getting their two-way project off the ground before incorporating Alitalia.
The Italian airline is struggling to cut losses and its attempts to restructure by shedding job are likely to face intense opposition from unions.
By 0858 GMT yesterday, KLM stock fell 4.7 percent to 12.83 euros after jumping 12.5 percent on Tuesday and Air France was down 2.5 percent to 12.76 euros, adding to a four percent drop in the previous session.
Dealers said the drop was fuelled by investor uncertainty about Air France’s price performance in the months leading up to the completion of the all-stock deal, which is valued at 16.74 euros per KLM share. Alitalia shares were down 1.3 percent having fallen nearly six percent on Tuesday.
Mengozzi said that when it came to incorporating Alitalia into the new Air France-KLM deal he hoped Air France might propose a share swap similar to the 40 percent premium offered on KLM’s share price when it came to incorporating Alitalia.
He also said a government decree for the privatization of Alitalia — a key step before it can join Air France and KLM — had been drawn up and should be sent to the cabinet for approval in the coming days.
Alitalia said on Tuesday it had agreed with Air France to start merger talks with a view to forming three-way group once the Italian state had ceded control of the airline.
Mengozzi told the newspapers that the start of merger talks for Alitalia was linked to the privatization decree which he hoped would be “as open as possible and allows us to seek our objectives in the most flexible way”.
Mengozzi also said Italy had won agreement that a three-way merger would use a “multi-hub system” including Italy’s two main airports — Malpensa near Milan and Rome’s Fiumicino — as well as Charles de Gaulle in Paris and Schiphol in Amsterdam.
The Northern League, a small but vociferous party within the government’s volatile coalition, has in the past championed Malpensa airport which lies in its electoral heartlands.
