Alitalia Close To Finalizing Alliance With Major European Carrier

Alitalia Close To Finalizing Alliance With Major European Carrier

Italian flag carrier Alitalia this week confirmed that it was in high level alliance talks with both Air France and Swissair. The move would restore the Italian airline to the world’s stage, following the disappointment, and humiliation, of being dropped from KLM Royal Dutch Airline’s global expansion plans.

“I can say that we have move forward in talks with both Swissair and Air France,” said an airline spokesman.

But, he added, the talks do not mean a deal is close. “To say we are near to a deal would be premature. All I can say is that we are discussing our future with both airlines, and a deal will probably be struck with one of them,” said Alitalia’s spokesman.

It is understood that the talks with both European heavyweights have yet to progress to serious financial commitments, and are far from evolving to a level akin with that between KLM and Alitalia, despite the Italian carrier’s assertions after the KLM split that it wished a similar relationship, the so called virtual merger, with another partner. “We are at the beginning of our conversation (with Swissair and Air France) so it would be too early to say that mergers are being discussed. Many things have to be said before that topic comes up,” said the spokesman.

“If you marry someone, you do not jump into bed straight away, you first need to court,” he added.

Swissair and Air France have long been the airlines expected to head the list of suitors for the Italian carrier. Swissair’s owner SAirGroup is known to covet a significant partner to bolster its Qualiflyer group, now a bit part player in the battle of alliances. Even if rumored talks with American Airlines [AMR] (which have just received their U.S. anti-trust immunity) prove true, having Alitalia in its portfolio would give the Swiss more power at the bargaining table.

However, Air France has closer links to the Italians. Alitalia pilots established a close relationship with their French counterparts as they did with the Dutch before KLM showed interest in Alitalia. Do they know something we do not? Analysts also point to the symmetry of Air France and Alitalia’s networks and have better access to the United States (a primary target for Alitalia) and Alitalia’s contact with the niche markets would add an exotic aspect to its SkyTeam alliance.

A partnership with Air France, however close, would also trouble other European carriers still pondering the long awaited consolidation of the continent’s airline industry. Air France’s Charles de Gaulle hub is primed to become Europe’s leading airport, and adding Alitalia’s Milan Malpensa International Airport – now seemingly at the end of its troubles with a European Union approval for development of the new hub expected at the end of the month – could tip the balance away from Lufthansa and the continually troubled British Airways [BAB], regardless of its merger with KLM.

COPYRIGHT 2000 Phillips Publishing International, Inc.

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