Air France Sets Condition on Airline Bids

Air France KLM will only consider making a bid for Spain’s Iberia or Italy’s Alitalia if the deal meets its target of an 8.5 percent return on capital after tax by 2009-2010, an airline executive said on Friday.

Speaking at the autumn conference of brokerage Cheuvreux, Chief Financial Officer Philippe Calavia repeated that European consolidation was necessary.

Air France has in the past not ruled out being interested in Iberia and has looked from a distance at Alitalia.

It has also previously said that struggling Alitalia should be privatized and restored to financial health before it would consider making an offer, and it refused to take part in an Italian government auction that flopped earlier this year.

Air France added that the level of forward bookings for the next three months remained good and confirmed its current year outlook.

Calavia said in a statement that unit revenues for the second quarter “should show a further rise year-on-year, while the improvement in the cargo division is continuing.”

“The strong level of activity during the summer period together with the successful rollout of the “Challenge 10” cost-savings program make us confident of increasing our operating income (for the full year),” it said in a statement.