unmanned transport
8th May 2004, 04:04
Merged Air France, KLM is world's biggest airline
PARIS (AP) - Air France and KLM Royal Dutch Airlines announced the creation of the world's largest airline, after KLM shareholders handed in their stock to seal the agreed merger between the two carriers. In the first cross-border merger of national carriers in Europe, Air France won 89.2 per cent of KLM's capital in an all-share exchange offer that closed late Monday.
KLM shareholders swapped their paper for a stake in the new group. Shares in Air France-KLM begin trading in Paris, Amsterdam and New York starting Wednesday.
The completion of the deal - a takeover in all but name - was welcomed by investors in Paris, where Air France shares rose as much as 3.1 per cent before easing back to close 0.3 per cent higher at $17.55 US.
First announced last September, the merger will create Europe's biggest airline, with combined revenue of $22.9 billion US, based on figures for the 2002-2003 fiscal year.
AMR remains the world's biggest carrier in terms of passenger traffic.
The share swap also reduced the French government's 54-per-cent stake in its flag carrier to a holding of under 45 per cent in Air France-KLM - completing Air France's long-expected privatization.
French Prime Minister Jean-Pierre Raffarin hailed the share swap as "very important progress in the consolidation of the European transportation sector'' and said it would benefit consumers.
The airlines are promising annual savings of $720 million US from the deal, but the scope for synergies is limited by the complex corporate structure they set up to overcome political and regulatory hurdles.
A change of nationality for KLM would have meant the loss of landing rights in the United States. This, as well as sensitivity to Dutch political concerns, led to a merger in which the two national carriers will theoretically remain separate, but both wholly owned by the Air France-KLM holding company.
The airlines will keep separate centres of operations at Paris' Charles de Gaulle and Amsterdam's Schipol airports, and the holding company will have only 49 per cent of the voting rights in KLM.
Analysts say these restrictions make it unlikely that other major European carriers will follow the Air France-KLM example anytime soon - despite a need for consolidation in the overcrowded sector, weakened by reduced passenger numbers in the wake of the Sept. 11, 2001, terror attacks and fierce competition from low-cost carriers.
"I don't think Lufthansa can do a similar deal where you buy something but don't take full control,'' said Christopher Avery of J.P. Morgan.
The Air France-KLM merger was only possible because the French carrier was state-controlled, he said.
PARIS (AP) - Air France and KLM Royal Dutch Airlines announced the creation of the world's largest airline, after KLM shareholders handed in their stock to seal the agreed merger between the two carriers. In the first cross-border merger of national carriers in Europe, Air France won 89.2 per cent of KLM's capital in an all-share exchange offer that closed late Monday.
KLM shareholders swapped their paper for a stake in the new group. Shares in Air France-KLM begin trading in Paris, Amsterdam and New York starting Wednesday.
The completion of the deal - a takeover in all but name - was welcomed by investors in Paris, where Air France shares rose as much as 3.1 per cent before easing back to close 0.3 per cent higher at $17.55 US.
First announced last September, the merger will create Europe's biggest airline, with combined revenue of $22.9 billion US, based on figures for the 2002-2003 fiscal year.
AMR remains the world's biggest carrier in terms of passenger traffic.
The share swap also reduced the French government's 54-per-cent stake in its flag carrier to a holding of under 45 per cent in Air France-KLM - completing Air France's long-expected privatization.
French Prime Minister Jean-Pierre Raffarin hailed the share swap as "very important progress in the consolidation of the European transportation sector'' and said it would benefit consumers.
The airlines are promising annual savings of $720 million US from the deal, but the scope for synergies is limited by the complex corporate structure they set up to overcome political and regulatory hurdles.
A change of nationality for KLM would have meant the loss of landing rights in the United States. This, as well as sensitivity to Dutch political concerns, led to a merger in which the two national carriers will theoretically remain separate, but both wholly owned by the Air France-KLM holding company.
The airlines will keep separate centres of operations at Paris' Charles de Gaulle and Amsterdam's Schipol airports, and the holding company will have only 49 per cent of the voting rights in KLM.
Analysts say these restrictions make it unlikely that other major European carriers will follow the Air France-KLM example anytime soon - despite a need for consolidation in the overcrowded sector, weakened by reduced passenger numbers in the wake of the Sept. 11, 2001, terror attacks and fierce competition from low-cost carriers.
"I don't think Lufthansa can do a similar deal where you buy something but don't take full control,'' said Christopher Avery of J.P. Morgan.
The Air France-KLM merger was only possible because the French carrier was state-controlled, he said.