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Alitalia must overhaul before Air France-KLM considers merger

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October 18
7:58 AM 2013

Chief Executive Officer Alexandre de Juniac of Air France-KLM Group said Alitalia must undergo a restructuring before a merger could take place. In an interview on French television, Juniac said a great European carrier could be carved out of Air France, KLM and Alitalia. However, he said, "But at this point, it's not guaranteed, because to do what we've asked, there has to be an industrial restructuring of Alitalia that goes a lot further than what we've seen so far."

Juniac added that Air France was in no position to continue funding the Italian carrier if it did not have a restructuring plan. Air France holds a 25% stake in Alitalia. According to Bloomberg, the French carrier had its reservations about investing in Alitalia. One reason was that Air France was also in the midst of its own restructuring program. Another was that it had also witnessed the decrease of the value of its holding in Alitalia.

Goodbody Stockbrokers Analyst Donal O'Neill told investors, "In our view, Air France-KLM should only take over Alitalia if the airline is allowed to enter bankruptcy."

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