Alitalia revives merger talks with Air France to stay afloat

Mumbai: Beleaguered Italian airline Alitalia SpA has revived talks for a possible takeover by Air France. The Air France-KLM Group, Europe's biggest airline, said it has restarted its merger talks with Alitalia.

``Exploratory'' discussions have begun on purchasing Alitalia, Air France-KLM chief executive officer Jean-Cyril Spinetta said at a press conference in Paris. He said the airline's management opened discussions with Alitalia over a possible merger at the Italian national airline's request. Preconditions for a merger would be ``a common vision'' and ``financial strength.''

Alitalia confirmed that ``exploratory'' discussions have begun with Air France `
`It's only if we have positive answers to these questions that we will be in a position to ask our board to pursue discussions with Alitalia,'' Spinetta said.

Alitalia has not posted an annual profit since 2002, and unless government action is taken to help the airline, the carrier is likely to go deeper into the red. Higher costs of fuel and personnel have eaten into its revenue from flights, which have increased.

Alitalia sold shares worth 1 billion euros last year to stay in business. The company's board said the airline has enough cash to survive for at least another year and sought a mandate to explore possible partnerships.

The Italian government said it would come up with a plan for the future of the 49.9 per cent state-controlled airline by the end of January. This may involve a change in management and an international alliance.

This is the third major airline to announce merger negotiations in eight days.