Leaders to discuss Alitalia's fate

Possible merger between Air France-KLM and Alitalia to figure in France-Italy summit.

    Chirac: France and Italy's economic ties
    could use improvement
    "In recent years the relations between our governments haven't been, due to various circumstances, as dense and productive as we would have hoped," he said in an interview with Corriere della Sera.
     
    "If I judge from my first contacts with Prodi - a longtime friend and partner - things change and the summit is the chance to give new impulse to our co-operation."
     
    Jean-Cyril Spinetta, the Air France-KLM chief executive, said on Thursday that talks begun recently with Alitalia could lead to the opening of merger discussions if Alitalia secures a turnaround and both companies share a strategic vision.
     
    Cash-strapped
     
    Analysts were not so optimistic that a tie-up would result from the talks.
     
    Christopher Avery, a JP Morgan airline analyst, said: "Air France has publicly said it will do nothing with Alitalia until it fully privatises and restructures, so exploratory talks do not necessarily lead to Air France breaking that commitment."

    The market welcomed the merger talk, sending Alitalia's shares up in trading, although they closed down later on Thursday.

    The cash-strapped airline, which is 49 per cent government owned, has reported widening losses due to increased cost of fuel, competition from low-cost carriers and the negative impact of a series of strikes.
     
    Real intentions
     
    Prodi said that he had doubts about the possible tie-up: "I would like to know Air France's real intentions."
     
    Does it want to create a big European transport group in which Italy would have a place, or simply grab the Italian air transport market, which is large and very lucrative?"
     
    Relations between Italy and France were strained earlier this year when Italian power group Enel appeared to be blocked in its attempt to take over part of French rival Suez. 
     
    Prodi and Chirac were also expected to discuss a Middle East peace initiative launched last week by Spain, France and Italy - as the three largest contributors to a UN peacekeeping force in Lebanon try to position themselves at the forefront of Middle Eastern diplomacy.

    SOURCE: Agencies


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