Delta Is Working With Air France-KLM on Possible Bid for Italian Airline ITA

(Bloomberg) -- Delta Air Lines Inc. said it’s working with Air France-KLM as the Paris-based airline considers joining in the bidding for a stake in Italy’s state-owned carrier.

Italia Tranporto Aereo would be a welcome recruit to the North Atlantic alliance led by Delta, according to Ed Bastian, the U.S. carrier’s chief executive officer.

“Air France-KLM is in the lead in terms of actually making a potential investment,” Bastian said in a briefing in London on Tuesday. “We’re providing strategic support through our partnership.”

A spokesman for the Franco-Dutch carrier declined to comment. 

Italy last month began the process of selling ITA following an approach in January from container line MSC Mediterranean Shipping Co., which was backed by Deutsche Lufthansa AG. The German carrier would be involved as an industrial partner from the outset and could eventually take an equity stake, the company has said.

Lufthansa has a partnership with the United Airlines Inc., and the two airlines compete in the Europe-U.S. market against Delta, Air France-KLM and Virgin Atlantic Airways Ltd.

Air France-KLM’s ambitions may be complicated by the company’s coronavirus pandemic bailouts from the French and Dutch governments. One of the conditions of the multi-billion euro packages is a block on taking a stake of more than 10% in a rival until it has paid the money back. 

According to Italy’s Repubblica, Air France-KLM and Delta are working with an unnamed fund as a potential partner on ITA.

Its predecessor, Alitalia SpA, was a long-standing member of the Delta-led joint venture on trans-Atlantic flights, something Bastian said couldn’t be the case with ITA if the Italian firm were to partner with a competitor. Since its began service last year, ITA has joined Delta’s SkyTeam Alliance. 

Air France-KLM acquired a 25% holding in Alitalia in 2009 before exiting eight years later. Abu Dhab-based Etihad Airways became chief investor with a 49% stake as the Italian firm filed for bankruptcy.

Bastian said a strategic role “would be the extent of it” in terms of Delta’s involvement and that only Air France-KLM is looking at taking an equity stake.

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