Air France-KLM Seeks Control of Alitalia: Plan Would Forge Three-Hub Group of European Airlines

 Oct. 17, 2013 4:49 p.m. ET

By David Pearson
The Wall Street Journal

PARIS—Air France-KLM SA wants to control struggling Italian airline Alitalia as part of a continuing restructuring plan and create a three-hub European airline group, Air France-KLM Chief Executive Alexandre de Juniac said Thursday.

Earlier this week, Alitalia's shareholders gave their conditional approval to a refinancing plan that would allow the airline to keep operating, but Air France-KLM, which owns a 25% stake in the Italian company, is pushing for a tough industrial restructuring plan to ensure that Alitalia will remain a viable entity over the longer term and won't need more help from its shareholders.

In an interview on France's LCI TV news channel, Mr. de Juniac said Alitalia needs to join a larger airline group. "Aside from financial and industrial issues, we feel it's essential that Alitalia should be integrated into a group like ours—and integrated means that we should be in a situation to control it," he said.

Air France-KLM, which consists of French carrier Air France and Dutch airline KLM, sought to take over Alitalia five years ago when the Italian company was in severe financial difficulties, but that project was scuttled by Italian politicians and Alitalia's unions. Air France-KLM subsequently took a 25% stake in Alitalia.

Mr. de Juniac said adding Alitalia to Air France-KLM would create a group with three European hubs: Charles de Gaulle airport in Paris, Schiphol in Amsterdam and Fiumicino in Rome. He said it would be "catastrophic" for Alitalia and Italy if Alitalia were to abandon its long-haul business.

"From what I hear from the Italian government, I get the impression that they are favorable to the creation of such a European group that integrates Alitalia" and in which each of the partners would have its own financial and industrial strengths, he said.

Mr. de Juniac stressed, however, that his group has its own financial difficulties and is seeking tough sacrifices from its personnel. "We don't have money that we can spend carelessly," he said.

One of the biggest challenges Alitalia faces is its sizable staff of more than 14,000 people. The Italian government is concerned that a radical restructuring of the airline would leave thousands of employees out of work, according to people familiar with the government's thinking.

—Daniel Michaels contributed to this article.

Source:   http://online.wsj.com