By Simon Zekaria - 26th February 2004
Plans by Italian flagship carrier Alitalia to join Air France and KLM in a three-way merger could be put on ice, following government comments that the airline would not be privatised.
Italian prime minister Silvio Berlusconi said on Wednesday that the government would stave off full privatisation of the ailing air carrier and instead launch an alternative financial restructuring plan based on part by part state divestment.
The government has a majority 62 per cent stake in Alitalia and is cautious about relinquishing full ownership powers to private investors.
Dutch carrier KLM and French airline Air France, whose merger was conditionally approved by EU regulators earlier this month, have insisted that the airline undergo full privatisation before decisive merger talks can begin.
On February 11 European Commission regulators cleared the tie-up between KLM and Air France, signalling the take-off of Europe’s largest airline, after the companies made concessions to boost competition in the air sector.
After the EU showed concern over dominance by the new group in Trans-Atlantic and Amsterdam to Paris routes, France and the Netherlands surrendered 94 take-off and landing slots to clear the deal.
The €800 million concessionary deal, scheduled to be sealed in April, was pushed through with Alitalia’s long sought-after merger plans in mind.
EU competition commissioner Mario Monti said at the time the merger between KLM and Air France showed consolidation of the European airline sector “can be done in full respect of competition rules”.
The tie-up formed Europe's largest airline with annual revenues of €19.2 billion under a new holding company, Air France-KLM, eclipsing the long-standing market leader British Airways.
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