Re: Thread Alitalia / Etihad
Air France says Etihad deal strengthens Alitalia investment case
Air France-KLM is still open to investing more in its struggling Italian partner Alitalia if restructuring conditions are met, despite the breakdown of talks last year and the emergence of a potential Middle Eastern investor.
Chief executive Alexandre de Juniac said in an interview with the Financial Times that a mooted investment from Abu Dhabi flag carrier Etihad Airways announced last week could even strengthen their business case for investing.
“I am keeping the conditions [for Alitalia] strictly on the table. They are on the table and they have to be fulfilled strictly,” said Mr de Juniac, adding that he would still “consider positively” making a deal if they were met.
Air France-KLM refused to participate in a €300m capital raising by Alitalia in December after failing to secure promises over restructuring. The subsequent share increase reduced its stake in Alitalia from 25 per cent to 7 per cent.
Last week Etihad Airways said it was in the final phase of a due diligence process for an investment in Alitalia, which people close to the talks say will be between €350m and €400m with a corresponding shareholding of 40 to 49 per cent.
The conditions being set out by Etihad to make the investment are similar in nature to those being insisted on by Air France-KLM, although with more capital being made available by the Abu Dhabi carrier.
Mr de Juniac said that “in some aspects” an Etihad investment would make the business case for investing stronger. “Etihad bring new money and also a co-operation in the east. It is something that is changing the business case,” he said.
He said that Air France-KLM would have to wait for the terms of any deal with Etihad before coming to a conclusion and that there could be negative aspects as well to the deal, such as not being “alone in the driving seat”.
Mr de Juniac added that either way the investment in Alitalia by Etihad would be on friendly terms, and would not hurt the existing Air France-KLM and Alitalia alliance. Analysts have raised concerns that an Etihad deal could weaken the relationship.
“I think we are an even more important partner for them [Alitalia] than they represent for us. It would be detrimental to both companies if our links were cut, but probably slightly more detrimental for Alitalia,” said Mr de Juniac.
“We understand that Etihad is willing to do something which is friendly, which for us is very important,” he said. “[This is] for obvious reasons, related to the links we have with Alitalia.”
Air France-KLM has, along with other national flag carriers, been struggling in recent years amid a weak economic environment and tough competition on short-haul flights from easyJet and Ryanair.
The group has been slashing fixed costs and reducing headcount by 7,900 under its Transform 2015 efficiency plan. The group has narrowed losses in recent quarters. The group reports full-year results on February 20.
Mr de Juniac said that the group focus now was not on acquisitions and that there were no plans to buy part of Virgin Atlantic, where its US partner Delta Air Lines has bought a 49 per cent stake, or Tap Portugal, expected to be privatised this year.
The comments were made following the launch of Air France-KLM’s new business-class seats that cost €50,000 each to make and turn into fully-flat beds.
Additional reporting by Giulia Segreti in Rome
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