July 27, 2017 / 5:29 PM / a year ago

Air France-KLM says Alitalia woes helped drive transatlantic shake-up

PARIS, July 27 (Reuters) - Air France-KLM said Alitalia’s precarious situation was one element of its plans to set up a new transatlantic joint venture with Delta Air Lines and Virgin Atlantic, with financial considerations and consolidation also playing a role.

The three airlines earlier announced a new transatlantic joint venture, which will replace two overlapping ventures - a partnership between Delta, Air France-KLM and Alitalia and another between Delta and Virgin Atlantic.

Frederic Gagey, Air France-KLM chief financial officer, said replacing the two separate partnerships, Alitalia’s situation and financial considerations were all reason behind the deal.

“It is true that Alitalia has been one of the elements pushing us to discuss the future of the joint venture, but I will not consider it as the main element,” he told journalists.

He also said that it was one way to drive consolidation within the highly fragmented airline industry, where cross-border mergers are often prevented by foreign ownership rules.

“The reason for this venture and timing is because it’s a very good idea,” Shai Weiss, Chief Commercial Officer of Virgin Atlantic, said.

“The foundation of this transaction is pure business,” he said when asked if Britain’s upcoming exit from the European Union played a role. (Reporting by Victoria Bryan and Tim Hepher)

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