Giant European airline merger announced
Air France has announced that it is taking over Dutch airline KLM to form an aviation giant.
The £3.5 billion deal will mean that the new Air France-KLM will become Europe’s biggest carrier, dwarfing rival British Airways, and the third largest airline in the world.
Negotiations have been taking place for more than a year. Trading in KLM’s shares has now been suspended while final details are ironed out. A share swap agreement has valued the Dutch carrier at 784 million euros.
Air France will dominate the new company, with its shareholders owning almost 80 per cent and its chief executive becoming head of the group. It is estimated that annual revenues for the super airline will exceed 19.2 billion euros.
The agreement is expected to generate savings of around £300 million a year and a number of jobs are expected to go.
Jean-Cyril Spinetta, Chairman and Chief Executive Officer of Air France, said: ” Today, we announce a combination with KLM that will create the first European airline group, which is a milestone in our industry. This will bring significant benefits to customers, shareholders and employees.”
Economic uncertainty and the growth of no-frills carriers have hit Europe’s leading airlines hard.
Air France also announced today that it has opened talks with Italian flagship carrier Alitalia about a possible merger.
