The Italian government has given the greenlight to loss-making airline Alitalia to begin exclusive talks with Air France-KLM about an eventual take-over by the French carrier.
However, the deal is opposed by much of Italy’s political and business establishment, fearing at least one hub in Milan could be abandoned, and because the airline is seen as a proud Italian symbol.
However the economy minister Tommaso Schioppa admitted: “A national flagship airline is something unique and that plays a key role in how a country identifies itself. But, by allowing it to join up with the world’s biggest airline group it is a vote of confidence.”
Air France has pledged to give Alitalia an immediate 750 million euros cash injection, and in the long term invest around 6.5 billion euros in the company.
It also says it will renew Alitalia’s fleet with as many as 88 new aircraft. However it will also cut costs by slashing 1700.
The financial differences between Alitaila and the Air France group are stark. Alitaila is losing around one million euros a day, while Air France made one and a quarter billion euros profit last year.
In terms of passenger numbers
Air France-KLM is the biggest airline in the world.
The French carrier believes it can make money from Alitalia, especially by taking over its lucrative Rome-Milan route.
Alitalia’s stock value jumped by 5.6 percent on the news that the government had given permission to the ailing airline to talk terms with Air France.