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Air France, KLM in deal to merge businesses
Amsterdam/Frankfurt, Sept 26: Air France and Dutch airline, KLM, have finally hammered out a deal to merge their businesses under a joint holding company, a German and a Dutch newspaper said on Thursday.
Amsterdam/Frankfurt, Sept 26: Air France and Dutch airline, KLM, have finally hammered out a deal to merge their businesses under a joint holding company, a German and a Dutch newspaper said on Thursday.
The deal if realised would create an airlines group surpassing British Airways as Europe's biggest and also pave the way for KLM and possibly its US partner Northwest Airlines, to join the SkyTeam airlines alliance.
Air France would hold 80 per cent to 85 per cent of the new holding company, and KLM would own 15 per cent to 20 per cent, said a German newspaper in an article released ahead of publication on Friday.
A Dutch daily, quoting sources close to KLM and the Dutch government, carried similar information in its Thursday evening edition.
But it said the deal was hung up over the Dutch government's need for assurance about the role of KLM's hub, Amsterdam's Schiphol airport.
A spokesman for the Dutch Transport Ministry said that progress had been made in talks on the partnership.
"We are still negotiating and there is progress," he said.
KLM's unions were told by management on Wednesday that a final deal could take up to two weeks, while Air France is scheduled to meet its labour leaders next Monday. A financial source close to the talks said that a final deal could come next week.
Both the newspapers said that KLM and Air France would be owned by a joint holding company headquartered in Paris but still fly under their own names.
The NRC Handlesblad reported that under one plan being considered, the holding company would get a 51 per cent stake in both Air France and in KLM and be managed by a board consisting of four representatives from Air France and four from KLM.
The German paper added that plans called for listing the holding company on the New York, Paris and Amsterdam stock exchanges.
The Dutch government, which owns a "golden share" in KLM allowing it to block any deal, could make a decision on whether to back the plan as early as Friday, both papers said. The government holds a weekly cabinet meeting on Fridays.
"We still have some issues on the table, some of them, but not all, related to the government," KLM spokesman, Bart Koster said.
Cross-border airline mergers are complicated by strict bilateral rules governing their rights to international routes. The Dutch government and KLM are also keen to ensure Amsterdam's Schiphol Airport remains an important hub.
The Dutch newspaper said that Prime Minister Jan Peter Balkenende had held intensive talks on Thursday with senior government figures about the KLM/Air France partnership.
The paper added that the Dutch government was expected to give its nod of approval to the deal on Friday and that KLM and Air France would announce a partnership sometime next week.
Air France declined to comment as did financial advisers Lazard and Citigroup, which is advising KLM. Bureau Report
The deal if realised would create an airlines group surpassing British Airways as Europe's biggest and also pave the way for KLM and possibly its US partner Northwest Airlines, to join the SkyTeam airlines alliance.
Air France would hold 80 per cent to 85 per cent of the new holding company, and KLM would own 15 per cent to 20 per cent, said a German newspaper in an article released ahead of publication on Friday.
A Dutch daily, quoting sources close to KLM and the Dutch government, carried similar information in its Thursday evening edition.
But it said the deal was hung up over the Dutch government's need for assurance about the role of KLM's hub, Amsterdam's Schiphol airport.
A spokesman for the Dutch Transport Ministry said that progress had been made in talks on the partnership.
"We are still negotiating and there is progress," he said.
KLM's unions were told by management on Wednesday that a final deal could take up to two weeks, while Air France is scheduled to meet its labour leaders next Monday. A financial source close to the talks said that a final deal could come next week.
Both the newspapers said that KLM and Air France would be owned by a joint holding company headquartered in Paris but still fly under their own names.
The NRC Handlesblad reported that under one plan being considered, the holding company would get a 51 per cent stake in both Air France and in KLM and be managed by a board consisting of four representatives from Air France and four from KLM.
The German paper added that plans called for listing the holding company on the New York, Paris and Amsterdam stock exchanges.
The Dutch government, which owns a "golden share" in KLM allowing it to block any deal, could make a decision on whether to back the plan as early as Friday, both papers said. The government holds a weekly cabinet meeting on Fridays.
"We still have some issues on the table, some of them, but not all, related to the government," KLM spokesman, Bart Koster said.
Cross-border airline mergers are complicated by strict bilateral rules governing their rights to international routes. The Dutch government and KLM are also keen to ensure Amsterdam's Schiphol Airport remains an important hub.
The Dutch newspaper said that Prime Minister Jan Peter Balkenende had held intensive talks on Thursday with senior government figures about the KLM/Air France partnership.
The paper added that the Dutch government was expected to give its nod of approval to the deal on Friday and that KLM and Air France would announce a partnership sometime next week.
Air France declined to comment as did financial advisers Lazard and Citigroup, which is advising KLM. Bureau Report