Air France-KLM and Etihad Airways are reportedly working on a JV, to be launched in autumn 2012, according to Le Figaro). The partnership will reportedly extend beyond the commercial cooperation previously announced. As previously reported in recent months, the two companies have been in talks about some form of commercial partnership that would fall short of a capital investment. The latest reports indicate Air France-KLM and Etihad would aim to create a link between Europe and the Middle East in a JV similar to the trans-Atlantic alliance between Air France and Delta Air Lines. The JV may later include Air Berlin, 39% owned by Etihad, and Alitalia, in which Air France-KLM owns 25%, and is part of efforts to better compete with Emirates and Lufthansa.
Air France-KLM and Etihad Airways working on JV: report
You may also be interested in the following articles...
Brexit follow-up Part 3: Gulf airlines, Turkish lose UK ally in M/E talks as protectionism spreads
The Brexit referendum produced a vote for the United Kingdom to leave the EU, although this process has not yet been formally invoked. In the scope of aviation, one outcome is the potential loss of the UK in shaping air service agreement negotiations. The UK has been a liberalising voice, one that often counterbalanced more protectionist views from France and Germany. The UK is often able to galvanise the smaller EU states too.
The EU now has mandates to negotiate open skies with states, including the UAE, Qatar, Turkey and the ASEAN bloc. The UAE and Qatar, home to the three Gulf network airlines, are expected to produce the most contentious negotiations. France and Germany will surely takes cues from Air France and Lufthansa to impede Gulf growth. In this light there are questions about whether the talks are genuinely motivated, or merely designed to draw out the discussion and thereby not produce any additional traffic rights while under negotiation.
What Air France and Lufthansa need is a real, lasting solution, rather than persevering Canute-like with stonewalling. Although a partnership seems logical, they may have waited too long. The Gulf airlines have found that they can succeed on their own.
Air France-KLM: margin grows, but performance and profit below IAG & Lufthansa airline groups.
The first of Europe's big three legacy airline groups to report results for 2Q2016, Air France-KLM improved its operating margin and still expects higher operating free cash flow for FY2016. However, it remains less profitable than the other two big legacy groups, IAG and Lufthansa, and is still reluctant to give a profit target for FY2016.
Air France-KLM's commentary on the outlook implies that it now expects to make a lower profit this year than previously anticipated, even if this is likely to be higher than in 2015. In effect, this completes a full set of profit warnings from the big three legacy groups, since IAG and Lufthansa have already signalled a lowering of their profit outlook for 2016.
By contrast, LCCs have generally been more positive in their 2Q reporting and outlook (with the notable exception of easyJet). All European airlines have highlighted a weakening outlook for unit revenue, due to industry capacity growth plus geopolitical and macroeconomic risks, but low cost airlines such as Ryanair and Wizz Air appear better placed to cope with this outlook, given their lower unit costs. At this point in the cycle, new Air France-KLM CEO Jean-Marc Janaillac will need to balance growth against productivity.