Air France-KLM may reinvest in Alitalia if conditions met: CEO

PARIS Thu Jan 23, 2014 4:35am EST

Alitalia's logo is seen at the top of the headquarters at Fiumicino international airport in Rome October 14, 2013. REUTERS/Max Rossi

Alitalia's logo is seen at the top of the headquarters at Fiumicino international airport in Rome October 14, 2013.

Credit: Reuters/Max Rossi

PARIS (Reuters) - Air France-KLM (AIRF.PA) will look at reinvesting in ailing Italian carrier Alitalia if the conditions it set for its restructuring are met, the Franco-Dutch airline's chief executive said on Thursday.

"Our partnership with Alitalia is very important," Alexandre de Juniac told reporters at an event organized by the European American Press Club.

"It's a partner, we've set conditions and if they are met we'll be ready to take a look," he added.

Air France-KLM, which had written off the value of its 25 percent stake in Alitalia to zero, saw this stake fall to around 7 percent after it snubbed Alitalia's emergency share issue in December.

Alitalia needs money to invest in more lucrative long-haul routes after a focus on domestic and regional flights failed to pay dividends due to competition from budget carriers and high-speed trains.

The airline is currently in exploratory talks on a possible investment by Abu Dhabi based carrier Etihad, which sources say is willing to take a stake of up to 40 percent.

The Italian carrier on Wednesday put forward plans to use state-sponsored social security schemes to avoid job cuts, though unions and analysts said it would not be enough unless Alitalia found a strong partner and came up with a strategic revamp.

Air France-KLM had also said the carrier's pledge for severe cost cuts was not enough to save it unless its creditors also wrote off some of its huge debts.

"Our three conditions have not been fulfilled ... But these conditions are still on the table," Juniac said on Thursday

Alitalia, which was privatized in 2008, has been unprofitable for more than a decade and has been stuck in a months-long tussle with Air France-KLM over whether to keep their strategic and financial partnership alive.

Alitalia's CEO told a shareholder meeting last week that Air France-KLM was still interested in a cooperation deal.

The Franco-Dutch group, in the middle of its own restructuring, had said in the past it would consider taking control of Alitalia, a partner in the SkyTeam alliance, to bolster access to the Italian travel market, Europe's fourth largest.

(Reporting by Natalie Huet; Writing by Victoria Bryan; Editing by Astrid Wendlandt and Jane Merriman)

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