Air France late yesterday successfully completed an exchange offer for shares in KLM Royal Dutch Airlines, saying 89.2 percent of KLM common shares were tendered to Air France. The combined Air France-KLM entity now stands as Europe's largest passenger airline group.
The airlines now will construct a joint holding company encompassing both, while the carriers operate as separate entities during a three-year transition
(BTN, Oct. 6, 2003). They also plan to begin integrating certain systems and processes in an effort to cut overall costs and achieve synergies.
"It is clear that a combined Air France-KLM is a much more substantial competitor for us, so clearly I am concerned," said British Airways CEO Rod Eddington, during an interview last week with
Business Travel News. "Having said that, Brussels is very thorough in these matters and has come up with remedies that I won't argue with
(BTNOnline, Feb. 11). I also won't argue with the principle. There are too many full-service network carriers. Philosophically, consolidation is the right thing."
The Air France-KLM tie-up is seen as the first large-scale step toward a consolidated European industry. British Airways, which already owns a minority interest in Spain's Iberia Airlines, has been considering a possible equity stake in struggling Swiss International Air Lines but no decisions have been announced. On a smaller scale, rival Belgian-based carriers SN Brussels and Virgin Express this spring entered an agreement to consolidate under common ownership.