KLM consolidates in Amsterdam with Martinair acquisition approval

KLM finally will become the sole owner of Martinair after the European Commission approved the Dutch flag carrier's proposal to acquire the 50% stake owned by A.P. Moller-Maersk Group.

The EC opened an in-depth investigation in September citing concerns of the transaction's potential impact on passenger transport, in particular between Amsterdam and Curacao and Aruba (ATWOnline, Sept. 10). Yesterday Competition Commissioner Neelie Kroes said she was "now satisfied that consumers will continue to have a competitive choice of airline services." Effects of the transaction would be limited not only because KLM already jointly controls Martinair "but also because Martinair's competitive strength has been constantly decreasing and, to regain its strength, Martinair depends on KLM's agreement to a renewal of its long-haul passenger fleet."

The EC also acknowledged that TUI Travel subsidiary ArkeFly operates the two routes and thus "any price increases on the part of the merged entity would be likely to be unprofitable."

KLM took an initial stake in AMS-based Martinair in 1968, but earlier attempts to gain full control of the smaller charter and cargo carrier failed to gain regulatory approval. KLM will buy A.P. Moller-Maersk's 50% stake by Dec. 31.

"With the European Commission approval, economies of scale and synergies become available. Plans for the future of Martinair within the Group will be developed in the coming period," KLM President and CEO Peter Hartman noted.

Martinair President and CEO Paul Gregorowitsch said the approval was "encouraging news after a long period of uncertainty. . .The Martinair restructuring activities can be actively continued given this perspective." The carrier reported a €68.9 million ($94.5 million) loss in 2007, widened from a €7 million deficit in 2006.