European Airline Giants Take First Step Toward Merger

01 October 2003

Two of the top four European airlines, Air France and KLM Royal Dutch Airlines have agreed to enter into an alliance that may ultimately lead to merger.

On Tuesday Air France confirmed it is to join forces with KLM, also that Italian national carrier Alitalia is eager to participate in the deal which could pave the way for the takeover of the Dutch carrier after planned European Union regulatory reforms.

The creation of Air France-KLM will form an aviation giant with annual combined revenues of some €19.2 billion ($22.4bn; £13.4bn), leapfrogging its nearest rivals Lufthansa and British Airways.

The deal which still requires the approval of shareholders and regulators, could tilt the balance of power within the international aviation industry, creating the world's third largest airline in passenger terms after US carriers, American Airlines and United Airlines.

In the interim Air France (ad agency Havas) and KLM (First Advertising) will continue as separate operating companies with their own brand identities.

Data sourced from multiple origins; additional content by WARC staff