Andy Nativi/GENOA
The troubled alliance between KLM and Alitalia has come to an abrupt end, with Dutch flag carrier KLM walking away from the deal. It cites two reasons for its decision: difficulties at Milan Malpensa, which should have been the duo's showpiece hub, and delays to the privatisation of the Italian airline, which was to have been completed by 30 June.
Other factors, however, appear to be behind the split, which came as the carriers were contemplating a merger and the formation of the "Wings" global alliance with US partners Northwest Airlines and Continental Airlines.
Alitalia's dismal financial performance, worse even than that of ailing KLM, was a headache. Yet despite the latter's greater strength, its value is only around half that of Alitalia, complicating talks. Sources say the pair clashed in meetings aimed at deciding the balance of ownership, power and costs, with problems arising over asset valuations and governance rules.
The timing of the divorce also hints at troubles beyond those cited by KLM. A few months ago the Malpensa question and Alitalia's privatisation were both stalled - yet today Milan's logjam has been unblocked and the privatisation has been approved at all levels.
Both carriers are likely to seek new partners, given the established benefits of airline alliances, and there is speculation in Italy that KLM has already been in contact with other airlines. Alitalia is reviewing its future, with chief executive Domenico Cempella offering to resign, but being asked to stay on. President Fausto Cereti is also under threat, while the new Italian Government is asking holding company IRI why Alitalia was not sold at the end of 1998.
Alliance candidates for Alitalia include Air France - which it resembles more closely than KLM - or Swissair. In the USA, Northwest has confirmed that the Alitalia relationship will continue. Privatisation is set for next year, with the sale of just 10% to a strategic partner - paralleling Iberia's scheme - a popular model.
The former alliance's fully integrated organisations will be de-merged, while KLM has demanded repayment of $100 million invested in Malpensa.
Source: Flight International
