Air France-KLM in advanced talks for Alitalia: report

ROME Sun Jan 6, 2013 8:11am EST

An Alitalia airplane is seen at the airport in Cairo January 20, 2011. Italy signed an agreement on Thursday with Egypt Air to carry out maintenance work for its Alitalia aircraft. REUTERS/Mohamed Abd El Ghany

An Alitalia airplane is seen at the airport in Cairo January 20, 2011. Italy signed an agreement on Thursday with Egypt Air to carry out maintenance work for its Alitalia aircraft.

Credit: Reuters/Mohamed Abd El Ghany

ROME (Reuters) - Franco-Dutch carrier Air France-KLM (AIRF.PA) is in "advanced" talks to take control of Italy's flagship airline Alitalia by the summer, Rome's Messaggero newspaper reported on Sunday without citing its sources.

Alitalia is owned by CAI, a consortium of investors that bought the then-bankrupt airline in 2008. CAI is already partly owned by Air France-KLM. Alitalia's shareholders can exercise options to trade their shares when a lock-up period ends on January 12.

In May, Air France said it would probably wait until at least 2014 before using its option to take control of Alitalia, in which it has held 25 percent since January 2009.

Air France-KLM has offered shareholders a 20 percent premium on what they paid for the airline in 2008, the newspaper said, probably in Air France-KLM shares. CAI paid a little more than 1 billion euros to take over Alitalia five years ago.

An Air France-KLM spokesman in Paris declined to comment on the report. Officials at Alitalia did not answer repeated phone calls.

But four-time Prime Minister Silvio Berlusconi, who scuppered Air France-KLM's last attempt to buy Alitalia, said he was still against the airline's sale. Berlusconi is badly behind in the polls ahead of a February 24-25 national election.

"Our country cannot afford not having its own flagship airline," Berlusconi said on his Facebook page. "If Alitalia had fallen into the hands of the French... many tourists would have ended up visiting the castles in the Loire valley instead of our cities of art."

Berlusconi won the parliamentary election in 2008 promising to keep Alitalia out of foreign hands and to clean the trash off the streets of Naples. He is trailing by more than 10 percentage points, polls show.

Alitalia returned to profit in the third quarter after reporting losses in the first half, booking a net profit of 27 million euros ($35.2 million), down from 70 million euros a year before.

Net debt rose to 923 million euros at the end of September, up by 61 million euros from the end of June. ($1 = 0.7666 euros)

(Reporting by Steve Scherer in Rome and John Irish in Paris; Editing by Helen Massy-Beresford)

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Comments (1)
EU_Hold_On wrote:
Silvio Berlusconi’s intentions to keep Alitalia in Italian’s hands are honorable, but they can’t afford it anymore. They fooled Air France once, will they manage to do it one more time? I doubt so.

Air France may grow a lot stronger by this aquisition. After the launch of its new low cost brand, they could use Alitalia network to develop new opportunities, and counter balance the new heavy actors which come frome the U.A.E and co.

However, is Alitalia ready to become part of a French company? Hostility against this idea may be desastrous for Air France Future. Hope the cheesy airline company will make the turn as propoerly as possible.

Jan 07, 2013 7:24am EST  --  Report as abuse
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