Air France-KLM and Etihad 'could opt for joint venture'

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With Air France-KLM and Etihad Airways confirming their appetite for closer cooperation, one aviation analyst tells Flightglobal a joint venture appears to be the most likely outcome.

SkyTeam member Air France has played down local media reports suggesting the airlines may form a joint venture between the Middle East and Europe, insisting no decision has been taken about the form of any such partnership. Some commentators had suggested they might follow the template of the transatlantic alliance between Air France-KLM, Alitalia and Delta Air Lines.

The prospect of closer cooperation had originally come to light in March 2012, when Air France-KLM chief executive Jean-Cyril Spinetta - previously an outspoken opponent of the Gulf carriers - confirmed the airlines were looking to work together.

Though both carriers refused to be drawn on the detail, Analyst Yan Derocles of Oddo Securities believes the talks are likely to result in a joint venture. He says such cooperation would benefit both parties, whereas a standard codeshare agreement would likely benefit Etihad disproportionately.

Derocles notes that Etihad's 29% stake in Air Berlin makes a joint venture an even more attractive option for Air France-KLM.

Describing the German and eastern European markets as "tough", he explains: "If you succeed in outsourcing part of this network to Air Berlin - linking part of Germany and Eastern Europe with Schiphol and Charles de Gaulle - it should be a nice deal for Air France-KLM. This will allow them to reduce their losses on one hand and free some aircraft on the other."