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June 18, 2024
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Air France-KLM Group CEO Ben Smith doesn’t seem too worried about the prospect of Lufthansa and sea shipping company MSC buying into Italian carrier ITA Airways. If the German/Swiss group gets a majority share in ITA, that doesn’t mean that the Italian market is lost to Air France-KLM, Smith indicated on February 17 during the 2021 results presentation. Air France-KLM not too worried if Lufthansa buys into ITA Airways.

Lufthansa and MSC expressed their interest in ITA Airways in January. Asked if a purchase could start a round of consolidation in Europe, Smith answered: “Before Covid, a few airlines were looking at the former Alitalia. The Italian market isn’t new for us, Air France and KLM in the past have taken a financial stake in Alitalia. It is of interest to us, but it is quite risky based on our past experience.”

The French-Dutch airline bought a 25 percent share in Alitalia in 2009 for €323 million but ended the joint venture in 2015. The Group took a €119 million impairment on the investment. In 2017/2018, Air France-KLM was seen as a potential investor in Alitalia again but decided against it.

“We are very happy with the fact that we recently gained additional slots at Milan Linate Airport, which is of huge value to us. When we looked at Alitalia in the past, this was always one of the major interests we had to secure that. And we hope to secure additional slots.” Linate is now one of the hubs of ITA Airways, which prefers the somewhat outdated airport close to Milan over the newer and more distant Malpensa.

Consolidation opportunities with other airlines aren’t limited to equity investments, Smith stressed. “It is also commercial partnerships that are also available to us and that don’t fall under the remedies that we currently have imposed on us.” He was referring here to restrictions in doing any mergers and acquisitions that are part of conditions laid out by the French government for their state aid to Air France-KLM. “For the future, we will of course look at anything that makes sense for us. And if it does, we will move ahead.”

Only a few weeks after commencing services in mid-October 2021, ITA Airways confirmed its partnership with SkyTeam, of which Air France-KLM is one of the leading airlines together with its shareholder Delta Airlines. Smith indicated that his airline can benefit from this alliance just as well.

Lufthansa and MSC are in the process of due diligence of ITA since early this month and have access to all financial data of the new airline, which was launched by the Italian government as means to restructure the country’s ailing airline system.

author avatar
Richard Schuurman
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016. Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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