The Melodrama Ends as Air France-KLM Joins Relaunched Alitalia

The strategic partnership comes at a cost of $427 million by Air France-KLM (AF-KLM), for which it receives a minority stake in Compagnia Aeria Italia, the new Alitalia (AZ).

After much declamation, coming together, going apart, fear of total bankruptcy, threats of crippling strikes, posturing by politicians, and fear of failing financing, among other matters, the new AZ sees the AF-KLM partnership as the best solution to providing “the best possible service between Europe and the rest of the world.” Both British Airways and Lufthansa had expressed interest in becoming an AZ partner, but neither really came up with concrete investment proposals. AF-KLM now has 25% ownership in AZ

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The new AZ retained major assets of its old self as well as merging with its Italian competitor, Air One, which strengthens its domestic coverage. International success is predicated on a multi-hub strategy that will include Paris Charles-de-Gaulle, Amsterdam Schiphol, Milan Malpensa and Rome Fiumincino on an equal basis.

Looking forward to saving through synergies over the course of the next three years—mainly through network optimization and revenue management—AZ expects the amount to reach $951 million.

“The agreement represents an important milestone in the history of Italy's flag carrier offering, as it does, three great opportunities: growth for Alitalia, increased competitiveness for Italy and an effective service for all Italian air travelers,” according to Roberto Colaninno, Chairman of AZ, and Rocco Sabelli, CEO of AZ.

Jean-Cyril Spinetta, Chairman of the AF-KLM Board, and Pierre-Henri Gourgeon, CEO of AF-KLM, observe, “In view of the many challenges facing our sector, strengthened cooperation is more than ever a necessity between carriers and we have now made a further step towards this. We are very happy with this extended partnership with the new Alitalia. It represents a genuine growth opportunity for our two airlines and our agreement is in the interests of our shareholders, our customers and our staff.”

A jolt of reality accompanied the new AZ on its first day of operations, January 13, 2009. Airline workers at Rome Fiumicino, Milan Malpensa and Linate staged protests, causing delays and some flight cancellations.

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