airproxx
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Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 3:57 pm

The french news magazine l'Express is reporting a rumour of a possible merge between AirFrance/KLM and Alitalia.
The article source is an Italian newspaper.
Sorry, link only in French:

http://www.lexpress.fr/actualites/1/...-un-quotidien-italien_1062734.html

I think it was just a question of time before such a merger would be announced....

Thoughts?
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PezySPU
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 7:18 pm

Berlusconi merged AZ with AP to prevent takeover by AF-KL, but now AZ will merge with AF-KL anyway.    What a waste of time and money. Wasn't it obvious that the present owner of AZ (CAI) would sell it to AF-KL after the lock-up period (OCT13)?
 
Kiwinlondon
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 8:37 pm

This rumour has been doing the rounds for at least a couple of years - no real surprise and probably just a matter of time.

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airproxx
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 8:40 pm

Here's part of the article translated in English, for non french-speaking:

"The mission of Alitalia for a wedding in Paris with Air France," headlined the newspaper, saying that Alitalia officials met Friday in Paris, the CEO of the Air France-KLM Group, Jean-Cyril Spinetta."

I think it's been a long term project of Spinetta to make such a merger possible. I'm not surprised to see him back in business, driving negotiations with AZ.

On a side note, AF/KL is looking for a strong reinforcement, with a sound partner. AZ is a strong one definitely.

The Berlusconi action on all this was more a personal image question than a real matter in national value of AZ. In fact, he didn't care at all... Now Berlusconi has gone, and the merger is possible again.

I think AZ will keep its own identity, just as KL and AF separatly did.

My question is, will the UE authorize such a merger, and if they do, how this will impact AF/KL/AZ main competitors, LH, and BA?
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 8:48 pm

I dont know how AZ is doing, but AF is not doing that great, so is it really a good idea to merge with another airline?
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shamrock604
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 9:02 pm

Quoting airproxx (Reply 3):
My question is, will the UE authorize such a merger, and if they do, how this will impact AF/KL/AZ main competitors, LH, and BA?

I don't see how competition authorities could disagree, given the precedent set by LH buying up almost every national airline within 1000 miles of Germany  
Quoting B747forever (Reply 4):
I dont know how AZ is doing, but AF is not doing that great, so is it really a good idea to merge with another airline?

AZ are a very much renewed carrier. There are still some hints of the old, state owned dinosaur, but on the whole, they are a much more nimble airline than they were. AF will work through it's issues - especially with Spinetta back in charge.
 
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 9:03 pm

Quoting B747forever (Reply 4):
I dont know how AZ is doing, but AF is not doing that great, so is it really a good idea to merge with another airline?

   I was wondering the same. AZ is still in the red, by the way.

Quoting airproxx (Reply 3):
how this will impact AF/KL/AZ main competitors, LH, and BA?

It might start a whole new round of takeovers. IAG is taking over BD, so they are fine for now, but LH might purchase TP.
 
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 9:15 pm

AirFrance - KLM needs to bulk up more with LH and IAG buying more airlines, the picking in Europe are getting slim. Alitalia would be the best option for AF-KLM group. IF Alitalia went with AF that means there are only 2 airline left to merge into larger groups, TAP and AL, except for SAS and Finnair.
 
Pihero
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 9:44 pm

That merger has been on the plans of AF-KL since they took a 25% stake in the new Alitalia, against Berlusconi'q wishes (and of somepeople of the Milan area ).
The contract signed in 2009 foresaw a transfer of AZ assets to AFKL in october 2013 (IIRC)...
It seems that they want to go faster, and that's understandable as for the weak economy of Italy at this moment, period presents quite a lot of opportunities for Lufthansa to start increasing market shares in Italian airports.
Only a merger with someone with a similar size as LH could fight that.
Problem is, just about everybody is hurting in Europe, and AF more than the averagte.
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 10:09 pm

French and Italians are close people so it could go well (could, and not should, because pride and other considerations will probably get in the way). I'm a little biased since my father is French and my mother Italian 
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airproxx
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 10:21 pm

I think, as people may see it, it could appear that Alitalia needs more AF/KL than AF/KL needs Alitalia...
But in my opinion, both airlines need each other in these times of economical crisis...
Let's see how networks will be modified afterwards... AZ is already centralizing its operations on FCO hub, letting MXP behind.
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 10:25 pm

I believe there was a restriction in the foundation of the new Alitalia-CAI two years ago where it banned AF-KL for purchasing any additional shares for a determined period of time.

I must inform myself better now, but has anyone got any info on this regard?

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PezySPU
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 10:44 pm

Quoting 797 (Reply 11):
I believe there was a restriction in the foundation of the new Alitalia-CAI two years ago where it banned AF-KL for purchasing any additional shares for a determined period of time.

Are you referring to the already mentioned lock-up period - until October 2013?
 
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RE: Rumour: AF/KL To Merge With AZ?

Sun Dec 18, 2011 11:29 pm

Quoting PezySPU (Reply 12):
Are you referring to the already mentioned lock-up period - until October 2013?

Correct, I looked it up already.

Anyhow, I don't see this materializing anytime soon. Although there are strong rumors stating that AZ will purchase some B777-300ER. This would definitely link them with AF, not to mention the new E-190 and E-170 fleet, which will all receive maintenance at an AF facilty.

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Pihero
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 12:31 am

Quoting 797 (Reply 13):
here are strong rumors stating that AZ will purchase some B777-300ER. This would definitely link them with AF,

Aircraft orders will get the synergy between the airlines going.
What is more interesting is how much / how far the nertworks and markets will be integrated : A very good omen is the TATL joint venture, of which AZ is certainly a good party.
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boeing773er
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 1:22 am

Quoting shamrock604 (Reply 5):
I don't see how competition authorities could disagree, given the precedent set by LH buying up almost every national airline within 1000 miles of Germany

Well, that is for reasons of them not profiting and could get them at a good price.

I feel like this AF/KL/AZ merger was long awaited ever since AZ has been getting rather cozy with the rest of Skyteam (ex. joining in on the JV with DL/AF/KL)

Plus, I don't see why this would
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 7:13 am

So would they call the merged company AirFranceKLMAlitalia   ? Or should they now think of a rebranding, or an umbrella company like IAG?
 
PezySPU
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 9:11 am

Quoting leftyboarder (Reply 16):
So would they call the merged company AirFranceKLMAlitalia   ? Or should they now think of a rebranding, or an umbrella company like IAG?

AZKLAF, AZAFKL, KLAZAF, KLAFAZ, Alcatraz,... the possibilities are endless.    But seriously, probably something like IAG.

Quoting 797 (Reply 13):
Anyhow, I don't see this materializing anytime soon.

Why not? AF-KL seems to be very interested in AZ ever since they purchased 25%. Plus, as Boeing773ER mentioned, they might get AZ cheap while they are still in the red. But I wonder if AF-KL will be able to absorb AZ's losses?
 
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 9:17 am

Interesting to know that no later than a week ago, the Italian newpaper "Finanza & Mercati" reported a news regarding DL to be in talks with AZ for their entrance in the Alitalia's capital.

(link in Italian)
http://notizie.virgilio.it/notizie/e...anza-mercati,32807324.html?pmk=rss

Then this news has been denied the following day by the AZ President, Roberto Colaninno.
(link in Italian)
http://www.annsa.it/web/notizie/rubr.../visualizza_new.html_13752337.html

It sounds like a way to intentionally leak some news with the purpose of putting pressure on AFKL for their takeover.
 
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 9:45 am

Quoting Pihero (Reply 14):
Aircraft orders will get the synergy between the airlines going.
What is more interesting is how much / how far the nertworks and markets will be integrated : A very good omen is the TATL joint venture, of which AZ is certainly a good party.

Yes, but what are those synergies? Economies of Scale seems a bit off. IMO, AZ would be the only winner. What does AZ have to offer AF/KL in flight network that they can't handle on their own?
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 9:47 am

KL is already pulling out of MXP. Will only serve LIN. There won't be any nighstopping klm at mxp anymore. Reducing costs. The only other stations where they do this is CDG and PRG. But there will be more to come. Makes more sense to have the local based partner aircraft operate the early flights then the foreign one.
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 10:42 am

Since AF-KL took the 25% stake in AZ, this was to be expected. Already they have some synergies going on with routes and maintenace. I wouldn't call it a merger though, as it won't happen between equals - it will more likely be a takeover, with AF-KL increasing its stake to fully take over the airline. As a result I can imagine an umbrella company like IAG owning AF, KL, AZ which keep their separate brands but coordinate fleets, routes, schedules, maintenance, etc.
 
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 11:05 am

Quoting PezySPU (Reply 17):
But I wonder if AF-KL will be able to absorb AZ's losses?

Which losses are you specifically talking about?

Alitalia is still in the red zone just because their investment was quite large when they became Alitalia-CAI, not because they have operating losses. As a matter of fact, they have been showing profits for over a year-time. Remember they have purchased a bunch of A320s, A319s, A330s, and the upcoming A350s.

797
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PezySPU
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 11:17 am

"Alitalia Group reported a net loss of €94 million ($134.9 million) in the 2011 first half, a 43% improvement from the €164 million deficit incurred in the year-ago period. It incurred a €5 million net loss in the second quarter. Half-year operating loss was €69 million compared to a €129 million operating loss in the year-ago period, yet EBIT was positive in the second quarter at €17 million."

Source: ATW

http://atwonline.com/airline-finance...ows-half-year-loss-94-million-0802
 
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 11:49 am

Quoting shamrock604 (Reply 5):
I don't see how competition authorities could disagree, given the precedent set by LH buying up almost every national airline within 1000 miles of Germany

You over estimate the size of our neighbours, Zurich, Brussels and Vienna are less than 200 miles away, but I agree that there will not be more than a few cosmetic requirements by the anti trust agencies - they are aware that the number of nework carriers in Europe will be 3, not one more and not one less.
 
airproxx
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 12:49 pm

Quoting Burkhard (Reply 24):
the anti trust agencies - they are aware that the number of nework carriers in Europe will be 3, not one more and not one less.

Yep, that's what I was thinking... This merger is just a project right now. To become reality, it has to be authorized by UE and the antitrust entity.
Nevertheless, I'm almost sure this possibility has been discussed before, and both AF/KL and AZ know the requirements and terms to be granted to do so...
The question about synergies is interesting... It seems both Air France and Alitalia are in a cultural revolution move, which implies the change in employees' mind about this old and stupid tradition of social actions and endless strikes.
Unions are still there, but maybe (I said MAYBE!) more conscious of the airlines needs... This should make KLM more confident in their partners.
In fact, to me, the main obstacle that could prevent from such a merger is the KLM board, especially considering both AF and AZ losses.
It's not a secret to anyone that the main AF/KL profit comes directly from KLM.
KLM keeps on filling the hole that AF digs, and maybe they won't agree to fill the one AZ digs too!
It's a thing to merge airlines together, it's another to make the whole group profitable...

I think the old continent yet has things to learn from our fellows American partners....
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797
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 2:00 pm

Quoting PezySPU (Reply 23):
"Alitalia Group reported a net loss of €94 million ($134.9 million) in the 2011 first half, a 43% improvement from the €164 million deficit incurred in the year-ago period. It incurred a €5 million net loss in the second quarter. Half-year operating loss was €69 million compared to a €129 million operating loss in the year-ago period, yet EBIT was positive in the second quarter at €17 million."

I stand corrected. Thanks for the input.

These figures, however, are far from being alarming. From the operational point of view AZ has been doing great, especially time-performance and service-wise.

Merging with AF/KL would definitely enhance the airline's reach, but I'm afraid most Italians will have a problem with loosing the 'battle' against the French.

797
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 2:38 pm

Perhaps a good name for a holding company for AF/KL/AZ could be Delta Europa or Delta CEE (instead of something bland such as the IAG moniker for BA/IB), since the name Delta can presumably be licensed from their US partner and is a phonetic name for the greek letter, pronounceable in virtually every language, and 'Delta' is also is used as a synonym for 'change', and in this case change for AZ would be good.
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peanuts
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 3:02 pm

Let's put it this way:

If AZ doesn't merge with AF/KL, something is seriously wrong with all three of them.
 
airproxx
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 5:07 pm

Quoting peanuts (Reply 28):
If AZ doesn't merge with AF/KL, something is seriously wrong with all three of them.

Agreed!
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 5:27 pm

Quoting Coronado (Reply 27):
Perhaps a good name for a holding company for AF/KL/AZ could be Delta Europa or Delta CEE (instead of something bland such as the IAG moniker for BA/IB), since the name Delta can presumably be licensed from their US partner and is a phonetic name for the greek letter, pronounceable in virtually every language, and 'Delta' is also is used as a synonym for 'change', and in this case change for AZ would be good.

Brussels Airlines may still have some rights to the Delta name since they originated from Delta Air Transport, the former Belgian regional carrier that operated certain routes on behalf of Sabena, much like the current SWISS was built on the foundations of former regional carrier Crossair.
 
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 5:37 pm

I would have liked AF/KL to buy VS/BD rather than Alitalia.
 
PezySPU
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RE: Rumour: AF/KL To Merge With AZ?

Mon Dec 19, 2011 7:46 pm

Quoting 797 (Reply 26):
I stand corrected. Thanks for the input.

These figures, however, are far from being alarming. From the operational point of view AZ has been doing great, especially time-performance and service-wise.

That's OK, happens to everyone   But, I never said (nor did anybody else in this thread) that AZ's figures are alarming. They are actually, IMO, fine. At least they are getting better YOY. The question is whether AF-KL will be able to take over AZ and remain profitable.

Quoting airproxx (Reply 25):
In fact, to me, the main obstacle that could prevent from such a merger is the KLM board, especially considering both AF and AZ losses.

  

Quoting peanuts (Reply 28):
If AZ doesn't merge with AF/KL, something is seriously wrong with all three of them.

I'm not saying that I disagree with you, but could you please elaborate?
 
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RE: Rumour: AF/KL To Merge With AZ?

Tue Dec 20, 2011 2:44 am

Quoting PezySPU (Reply 32):
I'm not saying that I disagree with you, but could you please elaborate?

Sure. We can go long version or short version on this elaboration. I choose short version, with all due respect.

The European aviation market is in a consolidation phase (as is the US). The big locomotives in this process are LH, AF and BA.
There is no question this process has to continue. Economical and political reasons are plenty.
Carriers like TP, OA, SK and a few others are no longer able to offer a vast worldwide network to their customers without any meaningful alliance.
The next step, closer and more efficient than an alliance, would be a merger.

I think AZ and its alliance adventure may have reached a point to where a merger is necessary. It could be for financial, logistical or political reasons. Or a combination of reasons.

AF/KL and AZ already have been "dating" on and off for a while. If an AZ merger (=marriage) is in the cards it would naturally be with the one you date right? Or am i missing something?

If European carriers are merging at the pace LH has done, it may be prudent for AF/KL and AZ not to sit around any longer. Streamlining close organizations and finding efficiencies and economies of scale is important for AF/KL right now. They have to stay competitive with LH and BA, and their following.
AZ feels it can't be left out.

On a side note: my last paragraph actually highlights as to why I believe AF/KL should just stop the "dual carrier, one company" charade already. If KL and AF could put their ego's aside and truly merge into one real company, great efficiencies could be had.

[Edited 2011-12-19 18:49:55]

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