SAirGroup and Taitbout Antibes have agreed to recapitalise the three loss-making French airlines - AOM, Air Liberté and Air Littoral - acquired with the aim of creating France's second largest airline group. Paul Reutlinger, the new group's president, aims "to go head-to-head with Air France".

The merger has been jeopardised by the poor financial performance of the three, and by strike threats from unions.

The Fr2 billion ($270 million) funding is to be split equally between SAir and Taitbout, owners of 49% and 51% of the new entity. Reutlinger has told unions the three will have a common commercial identity and a new name and livery "early next year" and that they will be fully merged by the end of the year. Air Liberté and AOM have already combined their domestic shuttle operations.

Reutlinger has meanwhile confirmed that the lease of at least eight Airbus A320s, for delivery next year, is being studied to begin replacement of 16 Air Liberté/Air Littoral Fokker 70/100s, which he says have "operating disadvantages", and 23 Air Liberté/AOM Boeing MD-80s, which would require "heavy modification" to operate after 2005. He says the aim is to build "a unified, harmonised fleet around Airbus products".

A third A340 has been delivered to AOM from Flightlease, while the overall requirement has been increased from six to eight.

Source: Flight International