Alitalia Joins SkyTeam

1
Alitalia Joins SkyTeam
27 July 2001
2
Key Points

• Alitalia joins SkyTeam, one of the major global
  airline alliances in the world
• Strategic bi-lateral commercial partnerships
  between Alitalia, Air France and Delta Air Lines
• Significant synergies identified
• 27 July 2001 effective date, subject to
  regulatory approvals

3
Alitalia Joins SkyTeam

• SkyTeam is a worldwide alliance in the airline
  industry for passenger and cargo services
  primarily
• System code-sharing
• Use of common customer standards
• Co-ordinated route development
• Frequent flyer program co-ordination and
  integration
• IT systems joint future developments
• Definition and implementation of cost saving
  opportunities and other benefits

4
SkyTeam Partners
Destinations 64 206 61 376 77 107 Countries 7 91 3
8 64 29 53 Daily Departures 337 1,700 134 5,280 40
3 869 Aircraft 69 238 30 601 113 162 Hubs 4 3 1 5
3 2 Passengers Carried (mn) 10.6 42.4 2.4 120.0 2
2.1 26.6 Employees 7,414 64,700 4,135 74,000 18,17
9 23,500
Source Published information
5
Market Position vs. Other Alliances

• SkyTeam is the worlds second largest alliance in
  terms of passenger share

(1)
RPK (bn) 342.6 487.7 646.8 222.5 116.5 RPK
Share 11.3 16.1 21.3 7.3 3.8 Passengers 204.
8 197.7 314.0 90.3 64.3 Passenger
Share 12.3 11.9 18.9 5.4 3.9 Revenues
(bn) 39.5 50.5 80.6 20.2 17.3
Source Airline Business, 2001 - Year 2000
figures (1) Including Alitalia
6
Alitalia-Air France Alliance

• Framework
• Creation of a European multi-hub system based on
  Paris Charles De Gaulle, Milan Malpensa and Rome
  Fiumicino
• Increased co-operation through Joint-ventures
• Long term and far reaching Alliance, minimum
  duration 10 years
• Passenger Business Agreement
• Full Joint-venture on Italy France bundle from 1
  April 2002
• Extensive use of code-sharing on a free-flow
  basis
• Full reciprocal FFP worldwide
• Product and service alignment, but separate
  brands
• Jointly define role of respective regional
  airlines

7
Alitalia-Air France Alliance

• Cargo Business Agreement
• Common network design and sales and marketing
  strategy
• Increased co-operation through Joint-Ventures
• Other Agreements
• Handling, Maintenance, IT and other business
  agreements through Joint-ventures where
  appropriate

8
Italy-France Bundle

• Full Joint-Venture on Italy-France bundle from 1
  April 2002
• Targeting 50/50 capacity sharing in approximately
  four years
• Alitalia and Air France will share the total net
  operating income (EBIT) of the bundle
• 60 for AF, 40 for AZ in Year 1
• 55 for AF, 45 for AZ in Year 2
• 50 for AF, 50 for AZ from Year 3 onwards
• Fleet operations principles jointly determined
  based on operational optimisation
• Sales forces separate and independent, but
  policies co-ordinated
• Co-operate to organise commercial activities
  outside respective home markets

9
Alitalia-Delta Air Lines Alliance

• Co-ordination of schedules and operations in
  order to maximise connections
• Extensive use of code-sharing
• Reciprocal participation in each others FFP
• Proration of Passenger fares
• Co-operation on facilities and passenger handling
• Lounge exchange program
• Common promotion and advertising
• Alitalia, Delta Air Lines, Air France and Czech
  Airlines will apply for Antitrust immunity to
  deepen the co-operation and achieve a higher
  degree of benefits on the transatlantic traffic
• Aiming at Anti-trust immunity among Alitalia,
  Delta Air Lines, Czech Airlines and Air France by
  January 1, 2002

10
Economic Benefits

• Estimated synergies (at EBIT level) expected to
  materialise from the Alliance with Air France
• Euro 130 million by 2003
• Euro 180 million by 2005
• A minimum of US 15/18 million from
  Alitalia-Delta Air Lines partnership at EBIT
  level in the first year of co-operation with
  current network and before any immunisation is
  obtained
• expected to be higher in the following years

11
Conclusions

• Alitalia joins SkyTeam, one of the major global
  airline alliances in the world
• Strategic bi-lateral commercial partnerships
  between Alitalia, Air France and Delta Air Lines
• Significant synergies identified
• 27 July 2001 effective date, subject to
  regulatory approvals