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Dutch losing National Airline ??



 
 
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  #1  
Old September 30th, 2003, 01:12 AM
Go Fig
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Default Dutch losing National Airline ??




UPDATE 5-Air France approves plans for KLM tie-up
Mon September 29, 2003 06:27 PM ET
(Rewrites with Air France go-ahead, Alitalia statement)

By Noah Barkin and Christopher Borowski

PARIS/AMSTERDAM, Sept 29 (Reuters) - The board of Air France AIRF.PA voted on
Monday to give a preliminary go-ahead to a tie-up with Dutch carrier KLM
KLM.AS that could lead to the first cross-border merger of leading European
airlines.

Air France and KLM, Europe's second and fourth-ranked carriers, have held
alliance talks for over a year and the groups finally looked set to announce
a deal on Tuesday morning.

Air France planned to issue a statement at 7.00 a.m. (0500 GMT) after
approving a letter of intent to team up with KLM, Yvon Toul, a representative
of the CGT union on Air France's board, told reporters after a board meeting.

The airline planned another board meeting in two weeks to finalise the deal,
Toul said.

KLM declined to confirm that its board held a simultaneous meeting and
declined to say if it also backed the agreement.

If approved by regulators, the two will create the world's third-largest
airline in terms of traffic, behind American Airlines AMR.N and Delta DAL.N .
It would become Europe's biggest, overtaking British Airways BAY.L .

Alitalia AZPIa.MI had hoped to be included in the merger of KLM and Air
France, its partner in the SkyTeam marketing alliance, but Toul said the
Italian state-controlled airline would be left in the cold, at least in the
first phase.

In what appeared to be a contradictory statement, Alitalia said its board,
which also met on Monday, still gave its Chief Executive Officer Francesco
Mengozzi the mandate to sign a three-way deal with the heads of Air France
and KLM "in the next few hours."

EFFECTIVE TAKEOVER?

French union members, who were briefed on the details of the agreement, said
Air France and KLM planned to create a joint holding company that would be
supervised by an evenly split committee of eight members, with a tie-breaking
vote going to Air France's chairman.

"The strategic committee will decide on all major strategic decisions,
including the makeup of of the combined fleet, network and alliance issues,"
said Toul.

But he added that the stakes the two airlines will take in the holding
company would reflect their respected market valuations, which suggests an
effective takeover of KLM by its larger rival.

Combined, the two airlines have a market capitalisation of 3.6 billion euros
($4.1 billion), with KLM accounting for 16 percent of the total.

The airlines would retain their separate identities, a prerequisite for
preserving their international landing rights,, and the Dutch government is
expected to keep its golden share in KLM for the time being.

Air France management told unions at a works council meeting that KLM would
retain its flying rights at Amsterdam's Schiphol airport for eight years.

GO DUTCH

Analysts said they were still not certain how a holding structure that gave
KLM shareholders a minority stake would prevent the Dutch airline from losing
its international landing rights, which are negotiated bilaterally between
governments on behalf of their airlines.

"I am waiting with great interest to find out what technique will be used to
prevent KLM from losing its 'Dutchness'," said JP Morgan analyst Chris Avery.

Air France shares ended up 1.26 percent at 13.69 euros while KLM stock was up
0.84 percent at 11.96 euros.

Because of concerns about preserving the landing rights of each airline the
deal will stop short of a full merger, making cost savings more elusive.

Air France had estimated a deal to be worth around 400 million euros in
synergies over five years but told unions on Monday these benefits would be
worth 500 million.

ABN AMRO analyst Andrew Lobbenberg said in a research note that while a
tie-up between the two airlines could leave operational staff numbers
unchanged, synergies could be had in head-office and marketing functions.

A successful Air France/KLM combination could serve as a model for other
full-service airlines struggling with an economic slowdown and growing
competition from no-frills airlines in an already overcrowded market.

Even many governments, which had once seen the existence of flag carriers as
a matter of national pride, now recognise the need for consolidation.

A tie-up would bring KLM into SkyTeam and pave the way for KLM's U.S.
partners, Northwest NWAC.O and Continental CAL.N , to come onboard at a later
date.

This would make SkyTeam bigger than the oneworld alliance of carriers led by
British Airways and AMR's American Airlines AMR.N and narrow the gap between
SkyTeam and the top-ranked Star Alliance led by Lufthansa LHAG.DE and United
Airlines UALAQ.OB . ($1=0.8752 Euro) (Additional reporting by James Crawford
in Rome)

------------------------------------------------------------------------
© Copyright Reuters 2002. All rights reserved.


--

Legend insists that as he finished his abject...
Galileo muttered under his breath: "Nevertheless, it does move."
  #2  
Old September 30th, 2003, 02:41 AM
Unpopped Cherry
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Default Dutch losing National Airline ??

Go Fig wrote:
"I am waiting with great interest to find out what technique will be used to
prevent KLM from losing its 'Dutchness'," said JP Morgan analyst Chris Avery.


I think that the "holding" company will hold just enough of KLM such that KLM
will initially remain Dutch. Then, once "euro" treaties are signed, combining
rights on a european-wide basis, then, the holding company could buy the
remainder of KLM.

Frankly, I am not sure why airlines bother with equity issues. Just getting
the two airlines in Skyteam with code sharing, shared check-in desks, baggage
handling and gates would give them the benefits that they seek without the
need for equity issues.

Consider Star which has combined purchases of certain items such as blankets,
utensils, and currently evaluating a "bulk purchase" of 100 seat jets.

However, if competition between KLM and Air France results in overcapacity,
perhaps there needs to be a single entity to decide on who gets to keep
flights and who gets to cancel certain routes, shifting traffic onto the other.

Merging the two is also stupid from the point of view of Unions. When you
consider the french unions and all the problems AF has had, it would be most
wise to keep KLM separate so that when AF is on strike, it can shift
passengers onto its buddy KLM that would still be operating.

And can they really combine human resources department into a simgle one when
you consider the different rules/laws for employees on two different countries
? (or is there a long term plan to unify all laws so that employers would give
employees of any EU country the same benefits ?

Anyways, it is all obvious to me that this is all an Airbus conspiracy. KLM is
a Boeing shop. Once Air France controls KLM, KLM will lose its blue livery and
start buying all-white Airbus planes with a colour LCD display on the tail and
fuselage that would allow instant livery change from AF to KL. And of course,
Airbus will force Air France to force KLM to buy some 380s.

This will result in Boeing going to the WTO with complaints of subsidies,
resulting in further strains between France and the USA , with Bob Bliar
choosing to support the USA, isolating the UK from the rest of the world and
turning the UK into the easternmost US state. Boeing will be reduced to
selling planes to US and UK airlines giving Airbus the vast majority of the
world commecial plane market.
  #3  
Old September 30th, 2003, 03:09 AM
Go Fig
external usenet poster
 
Posts: n/a
Default Dutch losing National Airline ??

In article ,
Unpopped Cherry wrote:

Go Fig wrote:
"I am waiting with great interest to find out what technique will be used
to
prevent KLM from losing its 'Dutchness'," said JP Morgan analyst Chris
Avery.


I think that the "holding" company will hold just enough of KLM such that KLM
will initially remain Dutch.


I should have added this, but its from another source. Apparently, the
KLM brand will be secure for 8 years.

jay
Mon, Sep 29, 2003




Then, once "euro" treaties are signed, combining
rights on a european-wide basis, then, the holding company could buy the
remainder of KLM.

Frankly, I am not sure why airlines bother with equity issues. Just getting
the two airlines in Skyteam with code sharing, shared check-in desks, baggage
handling and gates would give them the benefits that they seek without the
need for equity issues.

Consider Star which has combined purchases of certain items such as blankets,
utensils, and currently evaluating a "bulk purchase" of 100 seat jets.

However, if competition between KLM and Air France results in overcapacity,
perhaps there needs to be a single entity to decide on who gets to keep
flights and who gets to cancel certain routes, shifting traffic onto the
other.

Merging the two is also stupid from the point of view of Unions. When you
consider the french unions and all the problems AF has had, it would be most
wise to keep KLM separate so that when AF is on strike, it can shift
passengers onto its buddy KLM that would still be operating.

And can they really combine human resources department into a simgle one when
you consider the different rules/laws for employees on two different
countries
? (or is there a long term plan to unify all laws so that employers would
give
employees of any EU country the same benefits ?

Anyways, it is all obvious to me that this is all an Airbus conspiracy. KLM
is
a Boeing shop. Once Air France controls KLM, KLM will lose its blue livery
and
start buying all-white Airbus planes with a colour LCD display on the tail
and
fuselage that would allow instant livery change from AF to KL. And of course,
Airbus will force Air France to force KLM to buy some 380s.

This will result in Boeing going to the WTO with complaints of subsidies,
resulting in further strains between France and the USA , with Bob Bliar
choosing to support the USA, isolating the UK from the rest of the world and
turning the UK into the easternmost US state. Boeing will be reduced to
selling planes to US and UK airlines giving Airbus the vast majority of the
world commecial plane market.


--

Legend insists that as he finished his abject...
Galileo muttered under his breath: "Nevertheless, it does move."
  #4  
Old September 30th, 2003, 03:10 AM
Popped Cherry
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Posts: n/a
Default Dutch losing National Airline ??

Here is some text that helps explain how they will go around the ownership limits:

Air France and KLM have imagined a system to help safeguard other landing
rights - beyond the
trans-Atlantic slots, Cabrera said.

Although KLM would be a wholly owned unit of the Franco-Dutch holding company,
the latter would only
hold 49% of the voting rights in the Dutch airline.

A special purpose Dutch-based foundation would be set up that would hold 51%
of the voting rights in
KLM. Created for a renewable period of three years, the foundation would vow
not to veto key decisions by the holding company.

Beyond landing rights, the foundation also would allow the Dutch government to
have a say on KLM's
operations at the Schipol hub, a key asset for the Dutch economy.
  #5  
Old September 30th, 2003, 03:15 PM
Jesper Lauridsen
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Posts: n/a
Default Dutch losing National Airline ??

On Mon, 29 Sep 2003 21:41:53 -0400, Unpopped Cherry wrote:

turning the UK into the easternmost US state.


Nope, that would still be Alaska.

--
Don't be sorry to email me.
  #6  
Old September 30th, 2003, 04:11 PM
Not the Karl Orff
external usenet poster
 
Posts: n/a
Default Dutch losing National Airline ??

In article ,
Unpopped Cherry wrote:


Anyways, it is all obvious to me that this is all an Airbus conspiracy. KLM
is
a Boeing shop. Once Air France controls KLM, KLM will lose its blue livery
and
start buying all-white Airbus planes with a colour LCD display on the tail
and
fuselage that would allow instant livery change from AF to KL. And of course,
Airbus will force Air France to force KLM to buy some 380s.


Well, AF is also a big fan of 777s so I doubt this is the case. I
wonder if KL, if it hadn't already, specify GE engines for its
unbuilt/uncompleted 777s.
  #7  
Old October 2nd, 2003, 08:07 PM
EvelynVogtGamble(Divamanque)
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Posts: n/a
Default Dutch losing National Airline ??



Go Fig wrote:

UPDATE 5-Air France approves plans for KLM tie-up
Mon September 29, 2003 06:27 PM ET
(Rewrites with Air France go-ahead, Alitalia statement)

By Noah Barkin and Christopher Borowski

PARIS/AMSTERDAM, Sept 29 (Reuters) - The board of Air France AIRF.PA voted on
Monday to give a preliminary go-ahead to a tie-up with Dutch carrier KLM
KLM.AS that could lead to the first cross-border merger of leading European
airlines.

Air France and KLM, Europe's second and fourth-ranked carriers, have held
alliance talks for over a year and the groups finally looked set to announce
a deal on Tuesday morning.


I thought KLM and Northwest Airlines were already affiliated, and have
been for a number of years?
  #8  
Old October 2nd, 2003, 08:56 PM
jcoulter
external usenet poster
 
Posts: n/a
Default Dutch losing National Airline ??

"EvelynVogtGamble(Divamanque)" "evgmsop-no wrote
in :



Go Fig wrote:

UPDATE 5-Air France approves plans for KLM tie-up
Mon September 29, 2003 06:27 PM ET
(Rewrites with Air France go-ahead, Alitalia statement)

By Noah Barkin and Christopher Borowski

PARIS/AMSTERDAM, Sept 29 (Reuters) - The board of Air France
AIRF.PA voted on Monday to give a preliminary go-ahead to a tie-up
with Dutch carrier KLM KLM.AS that could lead to the first
cross-border merger of leading European airlines.

Air France and KLM, Europe's second and fourth-ranked carriers,
have held alliance talks for over a year and the groups finally
looked set to announce a deal on Tuesday morning.


I thought KLM and Northwest Airlines were already affiliated, and have
been for a number of years?


Yes, KLM owns a large piece of NW (as large as legally allowed) now we
have AF and KLM which bring Delta, Alitalia (once a partner with KLM
before the Malpensa/Linate rift) Continental and several others all
together in a mega consortium of relationships and cross ownership
(Delta and Alitalia) not having cross ownership that I know of but part
of the code sharing agreements with the others.
  #9  
Old October 2nd, 2003, 10:25 PM
Ulf Kutzner
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Posts: n/a
Default Dutch losing National Airline ??

Popped Cherry schrieb:

Here is some text that helps explain how they will go around the ownership limits:

Air France and KLM have imagined a system to help safeguard other landing
rights - beyond the
trans-Atlantic slots, Cabrera said.

Although KLM would be a wholly owned unit of the Franco-Dutch holding company,
the latter would only
hold 49% of the voting rights in the Dutch airline.

A special purpose Dutch-based foundation would be set up that would hold 51%
of the voting rights in
KLM. Created for a renewable period of three years, the foundation would vow
not to veto key decisions by the holding company.


Will be accepted by all third countries? Don't think so.

Regards, ULF
  #10  
Old October 2nd, 2003, 10:31 PM
Not the Karl Orff
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Posts: n/a
Default Dutch losing National Airline ??

In article ,
AJC wrote:

On Thu, 02 Oct 2003 19:56:24 GMT, jcoulter
wrote:


Yes, KLM owns a large piece of NW (as large as legally allowed)


No they don't actually


They did, IIRC, just up to the 25% limit. It all disappeared when NW
filed for chapter 11 a few years back.
 




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