Julian Moxon/PARIS

Air France expects to join a global airline alliance based on an agreement with one of its two US partners, "before the end of 1999", according to the airline's president Jean Cyril Spinetta.

The signing of the co-operation pact between KLM and Alitalia on 27 November left Air France as the only large European airline not tied to a major alliance. It has links with Continental and Delta, however, and it is with one of these that Spinetta says the core deal leading to a global alliance will eventually be formed.

"The KLM/Alitalia deal has not put us out of the game", says Spinetta. He says the relationship with both US carriers remains "very strong" and had contributed Fr360 million ($64 million) on North Atlantic routes. "We will be working intensely with both in the coming year to look at how our commercial, strategic and economic interests fit together".

Spinetta also said that despite June's crippling pilot's strike, which halved the expected profits for April-September, the carrier's finances were in sufficiently good shape to support an "early decision" on opening 20% of its capital to the market. He agreed it would be "easier" if the sale went ahead before the end of the financial year in March, but that the timetable is "up to the Government".

Half yearly results for Air France show profits of Fr1.37 million - about 4.5% on sales, while net income fell by Fr1.3 billion ($210 million) to Fr416 million. At Fr29.9 billion, sales were about stable, with a 0.5% increase over the same period in 1997 (the figure takes account of the sale of Jet Tours and of the Servair catering branch). "We lost Fr1.5 billion as a result of the strike", says Spinetta.

Proof of the carrier's fundamental health, he says, is in the 0.4% increase in passenger load factor, which rose to a record high of 76.5%, despite a 4.4% growth in capacity through the addition of new, mainly long-haul, aircraft to the fleet. Passenger traffic grew by 5.1% over the half year, mainly in long-haul operations, where the average load factor reached 79.8%.

The strike hit cargo operations more seriously, with a 12.4% drop in traffic, reflecting overcapacity on the market, coupled with the effects of the Asian crisis and transition to the new freight terminal at Paris Charles de Gaulle. "The strike had a more prolonged effect on cargo operations," says Spinetta.

The opening of capital comes as Air France moves into a new strategic phase of fleet re-equipment, improved operational flexibility and better cost control. The original Fr27 billion aircraft purchase plan will probably be stretched because of the worsening global air transport situation. Next year will see the arrival of seven more Boeing 777-200ERs (three are already in service), four Airbus A340s (16 now in service) , seven A319s (nine) two A321s (11) and two Boeing 737-500s (46, including 19 -200s due to be retired).

Source: Flight International