Admittedly, Air France-KLM missed the opportunity to buy Ita, the former Alitalia, now in the sights of Lufthansa. Will it invite itself to the capital of Tap Air Portugal, which Antonio Costa’s government wants to partially privatize? On paper, the Franco-Dutch group now has the means.
Financially first: after three years of losses, he returned to the green in 2022, with a net result of 728 million euros. “Even if its debt remains high and interest rates are rising, the group is in a much better position, explains Yan Derocles, analyst at Oddo Securities. We believe that it has the means to carry out a consolidation operation up to 5 billion euros.
Independence from Brussels
In addition, Ben Smith, its managing director, has a free hand vis-à-vis Brussels. On March 16, he announced that he had finalized the repayment of the four billion loan guaranteed by the State (PGE) granted during the health crisis, which was part of an envelope of seven billion granted by Bercy to avoid its bankruptcy. In addition to the PGE, Air France had benefited from a loan from the state shareholder of 3 billion, which will be settled by April 19, the company said.
However, this aid was subject to conditions imposed by the European Commission, including a ban on taking stakes of more than 10% in competitors. “Lufthansa, which had obtained 9 billion euros in aid, repaid it in November 2021, which allowed it to better negotiate for the takeover of Ita, when we had the favors of the previous Italian government”, regrets a close friend of the tricolor flagship. Now, time is running out, as there are not many targets left in Europe.
Cap on the Corsair company?
Recent statements by Benjamin Smith on the excessive number of carriers serving overseas have fueled rumors about his intentions. According to our information, the boss of Air France-KLM is looking at the file, even if the interest of a global takeover or even a minority stake may arise. “It’s a very political issue because of the issues with the regions and we wouldn’t really have a free hand, believes our source. Tap would be on a different scale.”
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Based at Lisbon airport, the Portuguese flag carrier announced on March 21 markedly improved financial results. It returned to profit in 2022, two years ahead of its forecasts. Its passenger traffic is approaching 14 million customers. Access to the Brazilian market, the company’s third destination, is also of interest to Air France’s European rivals. “But Lufthansa is busy with Ita, and IAG (British Airways, Iberia, Vueling), due to the geographical proximity of the Madrid and Lisbon hubs, would have problems with Brussels,” notes Yan Derocles. The Franco-Dutch group could make the link with its commercial partners, including the Brazilian low cost company Gol.