TRAVEL

The New, Larger Delta                               Lufthansa Italia

Delta Air Lines swallowed rival Northwest Airlines in a USD$2.6 billion merger that created the world's biggest airline by passenger traffic and prompted new speculation about further industry consolidation.  The all-stock transaction, the first domestic airline combination in three years, closed after clearing its biggest and last regulatory hurdle earlier in the day -- US Justice Department antitrust review.

The new, larger Delta will be an international powerhouse with unparalleled scheduling and pricing strength with service to 375 cities worldwide, experts said. The company estimates a combined USD$2 billion in cost savings and revenue enhancements annually.  An ambitious plan is to link the long-established strength of Northwest in Asia with Delta's expanding overseas network, and leverage benefits from the transatlantic SkyTeam alliance that includes Air France/KLM.

"There are global corporations but no global airlines. The race to become the first truly global airline has an incredible reward to it," said consultant Darryl Jenkins. "The revenue potential is something that we have not seen yet. That's the synergy that will make this very lucrative."  Jenkins and other experts said the deal's potential may re-ignite merger fever, which burned this year until fuel prices started their dramatic rise this summer to record heights and prompted sharp airline cost cutting.

Delta said customers should continue to check-in and do business directly with the airline operating their flights just as they did before the merger.  For the time being, the carriers will maintain separate web sites as well as two reservation systems and loyalty programs.  The new company will retain the Delta brand and be headquartered in Atlanta, where Delta is based. The new Delta begins operations with 75,000 employees.

Government approval of the deal comes as airline finances begin to improve with fuel prices falling sharply off record highs. But carriers are now cutting back service to save money as travel demand softens due to economic weakness.

[Source:  Reuters]            

Lufthansa launches new Lufthansa Italia brand  

Lufthansa, the German carrier said, on November 26, it would set up an Italian airline early next year as it vied with Air France-KLM to strike an alliance with bankrupt Alitalia. Its assets are being bought by the CAI consortium of top Italian businessmen, reports Reuters.

New Italian airline to be established - Lufthansa Italia to offer direct connections from northern Italy to European destinations - Flights already available for booking from 99 euros.  Lufthansa is launching its new "Lufthansa Italia" brand in Italy tomorrow. The new airline blends traditional Lufthansa values, notably reliability and high quality, with Italian flair. With an initial fleet of six aircraft, Lufthansa will be offering the best of connections from northern Italy to major European destinations from February 2009. Lufthansa is to found its own Italian airline under the new brand early next year and apply for an Italian Air Operator Certificate (AOC).

Flights to the first two destinations, Barcelona und Paris (Charles de Gaulle), will be operated from 2 February 2009. Flights to Brussels, Budapest, Bucharest and Madrid will be added to the timetable four weeks later. London (Heathrow) and Lisbon will be brought into the network with the start of the 2009 summer flight schedules at the end of March. The new services will provide Lufthansa customers with fast, non-stop connections. Flight bookings through the usual distribution channels with the new Lufthansa Italia airline began in mid-October.

An Airbus A319, seating 138 passengers in Business and Economy Class, will be operating the flights under the Lufthansa Italia brand.  

Gilles Castonguay reports (for Reuters) as follows:

Lufthansa said the move did not mean it was "closing the door" on its ambitions to tie up with the Italian airline.

When asked if Lufthansa's move would hurt its prospects for becoming Alitalia's partner, Pirelli & C Chairman Marco Tronchetti Provera, an investor in CAI, told reporters: "It doesn't change anything."

He told a briefing the priority for CAI was to choose a partner that would help it build a competitive airline.

CAI is buying Alitalia for 427 million euros ($550.8 million) and working to relaunch it as a smaller, more efficient carrier next month.

The airline picked as foreign partner is expected to buy a 20 percent stake.

On CAI's launch date, Italy civil aviation regulator ENAC said CAI would not be able to start airline operations on Dec. 1 as planned. In a statement, it did not give a date for the start-up.

ENAC has completed its examination for awarding CAI its passenger licence and operator certificate. ENAC can only issue these when it has evidence CAI has available the necessary financial resources for operating, it said.

"In addition, the documentation has to be finalised for the transfer of ownership of airplanes between the old and new companies," it said. 

[Source: Agencies]