KLM is hopeful that Martinair's decision to pull out of the short-haul leisure market will sway the European Commission towards approving the Dutch flag carrier's second attempt to take full control of the airline.
Martinair plans to end its short-haul Airbus A320 operations in November, a move which KLM lists as one of three favourable changes to the landscape since its last attempt to boost its 50% stake in Martinair to full ownership was blocked by the EC in 1998.
"Martinair intends to exit [the short-haul] market, as the sub-scale operation leads to prohibitively high unit costs and, in the view of the price levels and fierce competition in this market, it is not justified to invest to reach the necessary scale," says the carrier.
Martinair also says that, following a detailed study by its shareholders, "it would be in the interest of all stakeholders to realise a single shareholder structure for Martinair, preferably with KLM". The other 50% stake in Martinair is held by shipping group AP Moeller Maersk, which has expressed its willingness to sell.
KLM says it is talking with Maersk about price and conditions, and will also "have to check with Brussels" to see whether the proposed deal would be approved this time. It adds that Martinair's presence in the short-haul leisure market had been a "major concern" for the EC back in 1998.
KLM says the "attitude of Brussels" has also changed since then, with the EC now more focused on the open European market. It also expects the rise in low-cost and leisure charter competitors to increase the likelihood of the EC approving a full takeover of Martinair.
Martinair believes there is a future for its long-haul passenger operations and is examining its fleet renewal options: "Martinair's long-haul passenger business is considered to have enough potential to warrant continuation, but needs to improve its results drastically to be sustainable in the long run." It is looking into replacing its Boeing 767s with Airbus A350s or Boeing 787s.
Source: Airline Business
