Privatised global giant Air France-KLM is born

4th May 2004, Comments 0 comments

PARIS, May 4 (AFP) - A global airline giant was born on Tuesday with Air France taking over Dutch KLM to create the world's biggest carrier in terms of sales in a restructuring which also privatised the new entity Air France-KLM.

PARIS, May 4 (AFP) - A global airline giant was born on Tuesday with Air France taking over Dutch KLM to create the world's biggest carrier in terms of sales in a restructuring which also privatised the new entity Air France-KLM.

The deal is a major consolidation within the European air transport industry and comes a decade after EU competition officials cranked up pressure on governments to open their domestic markets in the interests of consumers.

Although major carriers including British Airways and Lufthansa still control large market shares, they nonetheless now face stiff competition from budget carriers such as easyJet and Ryanair, products of deregulation.

As a single airline, Air France-KLM boasts sales of almost EUR 19.2 billion (USD 23 billion), according to a Paris stock broker, making it number one worldwide.

In terms of numbers of passengers carried, the new carrier is third, behind American Airlines and Delta Airlines.

Air France has flown a long way since a controversial rescue in 1994 which was fiercely opposed by European rivals, including KLM.

But mooted plans to take other airlines under its wing, in particular the Italian carrier Alitalia, have been grounded, Air France chief executive officer Jean-Cyril Spinetta told the Financial Times Tuesday.

Air France and KLM said that 89.22 percent of KLM shareholders had accepted the takeover offer, tendering their shares in a swap estimated to be worth about EUR 800 million (USD 950 million).

A final figure is due Wednesday when all the financial instruments involved have been quoted on the Amsterdam, Paris and New York stock exchanges.

The deal reduces the French state's stake from 54 percent of Air France to 44.7 percent of Air France-KLM, a de facto privatisation of the French airline, the joint statement said.

The offer has now been extended under the same terms to May 21, but the statement said: "Today, Air France declares the offer unconditional."

Shareholders are to receive 11 Air France shares and 10 Air France warrants for every 10 ordinary KLM shares exchanged.

The governement has already indicated it would further reduce its stake to about 20 percent, and Spinetta told the Financial Times: "We presume this will happen later this year."

But previous speculation that Alitalia could join the new group was quashed as he said: "It is not in the picture, that is absolutely clear.

"The Italian government must first decide the privatisation of Alitalia."Italy's flag carrier is facing a serious crisis, with the daily Corriere della Sera saying Tuesday it was at risk of bankruptcy.

The sector has already witnessed the collapse of the Belgian carrier Sabena and Swissair, which was reborn in April 2002 as Swiss.

KLM had also been in serious trouble as a result of the September 11 attacks on the United States, the SARS health scare in Asia and growing competition from low-cost airlines.

On Tuesday however, its shares showed a gain of 3.39 percent at EUR 17.38 in midday trades, while Air France stock was up 2.46 percent at EUR 15.01.

The Amsterdam and Paris stock markets were both lower overall.Mergers and takeovers have now reshaped the European airscape.

National carriers have sought to create broad networks as budget airlines killed off regional carriers and began nipping at the majors's tails.KLM, for example, had held several rounds of merger talks with British Airways and Alitalia before finally agreeing to the Air France takeover.

The deal will bring KLM in to the Skyteam alliance, created in June 2000 and grouping AeroMexico, Air France, Alitalia, Czech airline CZA, Delta Airlines and Korean Air.

© AFP

Subject: French news

0 Comments To This Article