Air-France KLM buys ITA Airways: a Pyrrhic victory?

Against all expectations, Air France-KLM was chosen to enter into exclusive negotiations for the purchase of ITA Airways. A decision that we find rather disturbing.

A choice more political than economic

We presented the different offers in a previous article and came to the following bottom line: Air France-KLM, although a historical partner of Alitalia/ITA, was not the best choice for us.

Making a sensible economic choice would have been to choose Lufthansa, making a political choice would have been to choose Air France KLM. Well, politics won out.

Not sure it’s going to beneficial for all parts.

Air France-KLM a bad choice for the development of ITA

We share the opinion of some politicians who did not like the candidacy of the Franco-Dutch group. Everything suggests that while Lufthansa wanted to develop ITA and its Rome hub, Air France-KLM will mainly use the Italian airline to feed its Paris and Amsterdam hubs.

Too bad for ITA.

ITA a bad move for Air France-KLM

But we also believe that buying ITA is a mistake for Air France-KLM. Let’s be more precise: ITA is a good thing but not under the conditions of the Air France-KLM offer.

We will not remind you once again the long list of articles we have published on the slow agony of Alitalia. Its causes are many, but among them are politics and culture.

By letting the Italian government appoint the president of ITA and giving him a say in the airline’s strategic choices, Air France-KLM is shooting itself in the foot.

A good strategy but bad reasons

Sometimes you can have a good strategy, do smart things…but if you do it for the wrong reasons it can go wrong.

In the same way that at the end of the soccer market there are “panic buys”, that is to say purchases of players without any logic other than to spend one’s budget before the closing date, the purchase of ITA has everything of panic buy.

It does not seem that Air France-KLM needed ITA or had a real strategy for it, unlike Lufthansa. The only logic that seems to have prevailed was “do everything to keep ITA from going to Lufthansa“, even at the cost of all concessions.

Having few money, Air France-KLM had to put in the balance everything that would suit the Italians without it costing anything. Right of control over strategic choices, appointment of the president. They would have sent Anne Rigail to dance on the negotiating table if that would have helped.

A Pyrrhic victory?

However, there is nothing to say that Air France-KLM is at the end of its tether. A new government will soon be appointed in Italy and there is no guarantee that it will not block the sale.

The most nationalist parties have called for a pause in the sale process and are already saying that “it is very important to know (…) if it is possible to keep a national airline.”

This is promising.

It is therefore possible that in a month ITA will remain Italian and the mismanagement will continue.

Bottom line

Air France-KLM is therefore the favorite to buy ITA Airways under the nose of Lufthansa. We would be happy for the group if this did not happen under conditions that make us fear that it will be embroiled in a permanent psychodrama of which the Italians have the secret.

ITA by Davide Calabresi via Shutterstock

Bertrand Duperrin
Bertrand Duperrinhttp://www.duperrin.com
Compulsive traveler, present in the French #avgeek community since the late 2000s and passionate about (long) travel since his youth, Bertrand Duperrin co-founded Travel Guys with Olivier Delestre in March 2015.
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