Alitalia to scrap AF-KLM agreements from 2017

Alitalia will not renew its partnership agreement and ancillary joint ventures agreements with Air France-KLM when they come up for renewal in early 2017.
The agreements govern passenger services operated by the three carriers between Italy and France and beyond, and between Italy and the Netherlands and beyond, as well as the marketing, sales and distribution of Alitalia Cargo belly services undertaken by the AF-KLM.
Silvano Cassano, chief executive of Alitalia, said: “In our plans we also want to deliver up-to-date cargo solutions to the Italian manufacturing industry, the second largest in Europe, which has growing needs to export goods worldwide.”
The AF-KLM original agreements were concluded with the Italian carrier’s then parent group, Alitalia CAI, in 2009 and 2010 “under very different economic circumstances,” and were subsequently transferred to Alitalia SAI in January 2015 said Cassano.
In August 2014, UAE-based Etihad Airways spent €560m to acquire a 49% equity stake in Alitalia and stated its intention to invest billion dollar sums in its new European partner airline.
Cassano said of the AF-KLM arrangements: “These agreements are no longer beneficial, either commercially or strategically, to the new Alitalia and its ambitious turnaround plan. They were negotiated when Alitalia was in a very different position, with the result that the agreements in their current forms favour the other party.
“They are undermining our ability to restructure our network and the airline effectively to achieve the long term sustainability of our business. The new Alitalia is in a new position. Our business needs agreements which deliver equitable value to each party."
He added: “We have indicated to Air France-KLM that we are willing to discuss more equitable arrangements that benefit all the parties involved, but thus far we have been unable to achieve this result.
“We remain open to further discussions to achieve a mutually acceptable solution. However in the interest of transparency and certainty for all parties, we felt it necessary to announce our intention not to renew these agreements under the present conditions.”
At the time of the Etihad announcement, the Abu Dhabi-based carrier’s president and chief executive, James Hogan, said that his airline intends to take advantage of the positioning of Italy’s Malpensa airport by moving Etihad’s own cargo operations through there.
Said Hogan: “Cargo is an important part of the mix, we are a major cargo operator in our own right – it’s a billion dollar business within Etihad Airways.
“To be able to build the Alitalia cargo business is a key part of our strategy.”