Swissair has expanded its European alliance to include TAP Air Portugal, THY Turkish Airlines and AOM of France and agreed to buy up to a 20 per cent stake in TAP.

TAP, Turkish Airlines and AOM will join Swissair's existing partners Austrian Airlines and Sabena in an alliance to be called the Qualiflyer Group.

Swissair is to buy up to 20 per cent of the 39 per cent stake which the Portuguese government is selling in TAP, says Swissair. The Espirito Santo group, which owns rival Portugalia, is said to be the other investor interested in TAP. Employees may be offered a 10 per cent stake - a proposal which TAP chairman and chief executive officer Manuel Ferreira Lima is 'personally' backing. TAP also wants to join the Delta-Swissair Atlantic Alliance once Portugal and the US have an open skies agreement.

Swissair will not comment on progress in its plan to buy a 30 per cent stake in Italian startup Air One and bring it into the alliance.

Swissair has no immediate plans to buy into Turkish Airlines, also slated for privatisation, but a stake 'may also come,' says Swissair executive vice-president and chief financial officer Georges P Schorderet. 'If you want a partner in Europe, it is necessary to take an equity stake. It confirms your commitment,' says Schorderet. Swissair already owns minority stakes in Sabena, Austrian Airlines and Delta Air Lines.

Schorderet is confident that any outlay that Swissair makes on equity stakes can be 'justified' by cost savings. He estimates that Swissair and its Qualiflyer partners will save SFr200 million (US$131 million) over the next three years.

The alliance will have an annual turnover of $11 billion and fly 47.4 million passengers on a fleet of 401 aircraft. The alliance aims to cut costs and expand revenues through cooperation on frequent flyer programmes, codesharing, IT, baggage handling, sales, training, cargo and maintenance.

Turkish Airlines is 'expecting a cost saving of at least 10 per cent' and a 12 per cent increase in revenues this year, as a result of joining the alliance, according to Turkish Airlines' executive vice-president commercial Yukel Gurol.

Gurol says the 'alliance will give us a better opportunity to expand through codesharing' and that Turkish Airlines can bring 'a very strong presence in the Middle East and CIS' to the Qualiflyer Group.

The alliance will allow Swissair to tap into local, European markets and make it more 'attractive to potential partners in the US and Asia' says Schorderet. Swissair is still looking for Asian partners following the collapse of Global Excellence. It says it will limit itself to 'route specific' alliances there, arguing that Asia is too big to be covered by any single Asian carrier.

Source: Airline Business