Air France-KLM agrees to buy VLM
25.12.07
Air France-KLM is to buy Belgium's VLM, the biggest airline operating out of London City Airport, VLM said in a statement yesterday. No financial details were released of the surprise takeover coup, which is subject to regulatory approval. However, the French airline is reported to have beat off rival interest from British Airways, which also operates from London City.
The move will see VLM, which operates over 100 flights a day using a fleet of 18 Fokker 50 aircraft and one BAE 146, with the Docklands airport a hub for most of its services, link up with the Dublin based Air France subsidiary CityJet. The takeover will make Air France-KLM the dominant player at London City, the small but fast-growing airport located close to the financial districts of the City of London and Canary Wharf that specialises in lucrative business travellers.
The Dutch-French airline, the world's biggest by turnover, will control around half of all the takeoffs and landings at the airport. Given current flight restrictions (which the airport is applying to increase) London City is virtually full at peak hours, making it almost impossible for rival carriers to launch new services.
All three leading European airlines, Air France-KLM, Lufthansa (which includes Swiss), and BA, have made expansion at London City a priority during the last year and have been competing hard in head-to-head competition. If the takeover is approved, the French carrier will acquire a powerful presence on an important part of BA's home turf and in particular in the market for business passengers flying on short-haul UK and European routes out of London, the biggest aviation market in Europe.
Four weeks ago BA announced that it would increase its flights from London City by 32 percent next year, raising its fleet serving the airport to 12 aircraft and increasing its network to nine destinations by adding Nice, Amsterdam, Barcelona and Warsaw. It is understood that BA had shown keen interest in taking over VLM, but lost the deal to its French rival.
VLM is being sold by Panta Holdings of the Netherlands, which is 100 percent owned by the Dutch businessman Jaap Rosen Jacobson. Launched in 1993, it has carved a niche as a full service regional business airline with its main base at London City, outside of its Belgian home territory. Business travellers represent more than 80 percent of its customers.
The airline's chief executive Johan Vanneste said the move would 'create value for our customers, as this transaction will give them access to the largest number of destinations from London City Airport.' He added that 'the strengths of the Air France-KLM group will provide the necessary support to take the development of VLM Airlines to the next level.'
CityJet chief executive Geoffrey O'Brian-White welcomed the deal. In the statement he said VLM and CityJet's 'networks are highly complementary and the new combined network will link London City with major European business and financial centers.'
The acquisition comes hot on the heels of a recent Air France-KLM offer to acquire Italy's ailing state-controlled airline Alitalia. Last week, Alitalia's board unanimously named the airline as its preferred bidder. The Italian government is studying the proposal and is expected to decide whether to sell its 49.9 percent stake in the airline next month.
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