Air France-KLM to buy VLM
25.12.07
Air France-KLM has agreed to buy Belgium's VLM, the biggest airline operating at London City Airport. No financial details of the surprise takeover coup have been released, however, the French airline is reported to have beat off interest from rival 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 the hub for most of its services, link up with Dublin based Air France subsidiary CityJet. The takeover will make Air France-KLM the dominant carrier at London City.
After the deal, which is subject to regulatory approval, completes, the Dutch-French airline, the world's biggest by turnover, will control half of all the takeoffs and landings at the airport. Given current flight restrictions (which London City is applying to increase) the airport 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 airline will hold 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% next year, raising its fleet serving the airport to 12 aircraft and increasing its network to 9 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% owned by the Dutch businessman Jaap Rosen Jacobson. Launched in 1993, it has carved a profitable niche as a full service regional business airline with its main base at London City. Business travellers represent more than 80% 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.' He added that 'the strengths of the Air France-KLM group will provide the 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 route 'networks are highly complementary and the new combined network will link London City with major European business and financial centers.'
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