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US Approves Trans-Atlantic Joint Venture Without Alitalia

US Approves Trans-Atlantic Joint Venture Without Alitalia

The U.S. Department of Transportation (DOT) has granted antitrust immunity to a trans-Atlantic joint venture that comprises Air France-KLM, Delta Air Lines Inc. (NYSE: DAL) and Virgin Atlantic while blocking financially struggling Alitalia from the pact. Cutting Alitalia from the joint venture is a further blow to the struggling Italian flag carrier as trans-Atlantic service is one of its few money-making services.

The new joint venture, which is expected to launch in the near future, replaces separate agreements that Delta had entered with the other airlines. "The approved alliance will remove the existing gaps preventing full coordination between Delta's two existing immunized parallel joint ventures with Virgin on the one hand and Air France-KLM on the other," the DOT said. 

The three members of the SkyTeam Alliance are already interconnected. Virgin Atlantic is 20% owned by the Virgin Group, 31% by Air France-KLM and 49% by Delta, while Delta owns 8.8% of Air France-KLM. 

The DOT had given tentative agreement to the deal, which was opposed by JetBlue Airways and Kalitta Air, in August. JetBlue's protest was based on the low-cost carrier's restricted access to slots at London Gatwick, London Heathrow and Amsterdam Schiphol airports. 

Kalitta had lobbied the DOT to have antitrust immunity for the joint venture conditioned on the cargo carrier gaining access to Schiphol. It argued that the joint venture would dominate access to hub airports like Schiphol.

The DOT mandated a regulatory review of the pact every five years among several prerequisites to sanctioning the partnership.

The DOT's blocking of Alitalia from the agreement coincides with the Italian government's acknowledgment that a $1 billion rescue plan for the carrier had hit the skids. 

Stefano Patuanelli, Italy's economic development minister, on Nov. 26 told a parliamentary hearing that the deadline to wrap up a deal that involved state-run railway group Ferrovie dello Stato (FS), Italian holding company Atlantia and Delta would not be extended. The previous deadline expired Nov. 21. Patuanelli stressed that the government continues to explore options to rescue Alitalia.

Image Sourced from Pixabay

Posted-In: air cargo Alitalia FreightM&A News Global Markets General


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