Air France-KLM won’t revisit ITA even as it lauds consolidation

Air France-KLM Group Chief Executive Officer Ben Smith signaled he’s unlikely to take another look at Italian carrier ITA Airways, even if the airline comes back on the market in the event of a failed takeover bid by Deutsche Lufthansa AG. 

Italy is “a difficult market, when you look at the two airports, you look at Milan, you look at Rome, there’s a lot of foreign competition in Milan,” Smith said in an interview with Bloomberg Television on Monday in Dubai at the IATA annual general meeting. “If there were a business case to be had, we would be pursuing it a lot harder.”

Lufthansa’s planned €325 million ($352 million) investment in ITA Airways has run into potential trouble as competition authorities seek remedies on routes that could derail the deal. Air France-KLM has owned stakes in the Italian carrier’s predecessor at different points in the past, and Smith said on Monday that “neither one of them worked out.” 

“We looked at it a third time, we walked away from it,” Smith said, referring to Air France-KLM’s decision not to pursue a possible ITA bid.

Smith reiterated his interest in airline consolidation to help carriers gain scale and better compete with American and Gulf airlines. The focus of the European Union, which complicates such transactions, is “wrong,” the CEO said.

Air France-KLM is “very happy” with its investment in Scandinavian carrier SAS AB, and the group remains interested in Portuguese airline TAP SA, Smith said.

“We run the numbers on any opportunity that could be financially accretive,” Smith said. “We are totally for consolidation in Europe.”