Air France-KLM starts merger talks with Alitalia, announces acquisition of VLM Airlines

Negotiations between Air France-KLM and Alitalia on a possible merger were scheduled to start on 3 January after the deal received official approval from Italian minister of finance, Tommaso Padoa-Schoppia, last week.

"We are very satisfied with this decision, which represents a key stage in the process, and we are committed to rapidly reaching a solid agreement that paves the way to the profitable growth of Alitalia," AF-KLM chairman and CEO Jean-Cyril Spinetta said last week.

The Alitalia board unanimously backed AF-KLM's non-binding bid on 21 December 2007. The initial negotiating phase is expected to last eight weeks.

Meanwhile, the Franco-Dutch carrier has kept up the pace on its consolidation drive announcing an agreement to acquire VLM Airlines. VLM operates a fleet of 18 F50s and one BAe 146 and is the largest carrier at London City airport.

Financial details of the transaction were not disclosed.

"The strengths of the Air France-KLM Group will provide the necessary support to take the development of VLM Airlines to the next level," VLM MD Johan Vanneste said. VLM, which is expected to report its tenth consecutive profitable year in 2007 will now link up with Dublin-based CityJet, a 100% subsidiary of Air France that also operates out of London City.

"Both networks are highly complementary and the new combined network will link London City with major European business and financial centres," CityJet CEO Geoffrey O'Byrne-White said.