Alitalia CDA General Meeting

Today`s meeting of the Alitalia Board of Directors, chaired by President Fausto Cereti, approved the general lines of the contract for Alitalia to join the Sky Team global alliance.

Set up last summer, Sky Team has now achieved a leading role in the air transport sector. The alliance is made up Air France and Delta Air Lines, together with AeroMexico, Csa Czech Airlines and Korean Air.

Every day, Sky Team provides its customers with 7091 flights to 472 destinations in 112 countries, with a combined fleet of 1013 aircraft. In the first year of operation, it transported over 176 million passengers. The total workforce exceeds 155,000.

At the same meeting, the Alitalia Board also approved the contents of the agreements with Air France and with Delta Air Lines which will be signed on July 27 by the CEO Francesco Mengozzi, to whom the Board mandated full powers.


The agreement between Alitalia and Air France is broadly based on the mutual commitment to develop a multi-hub system involving three airports - Paris Charles De Gaulle, Milan-Malpensa and Rome-Fiumicino - and it also envisages long-term cooperation until October 31, 2011. After that expiry date, the agreement will be renewed automatically for five-year periods, as long as it is not cancelled.

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Among the specific clauses in the alliance agreement with Air France, to be pursued within the framework of operative governance equally distributed between the two carriers, one clause concerns an Alliance Co-ordination Agreement (ACA) which contains the general principles and the basic objectives of this bilateral agreement, including:
* the development and improvement of services provided for customers;
the search for areas of synergy in order to create value for the shareholders;
* the adoption of marketing strategies with highly competitive fares on global markets;
* the creation of stimulating work conditions for employees, with more incentives;
* achieving the highest standards for the sector in environmental protection.

At the same time as the ACA is signed, two further collaboration contracts will be signed: the Passenger Business Agreement (containing four separate sections: the Code Sharing Agreement, the Interline Agreement, the Frequent Flyer Program Agreement and the Lounge Usage Agreement) and the Cargo Business Agreement.

In terms of the Italy-France axis, the aim is to operate under full joint-venture conditions with a balanced growth of capacity. Within this framework, it is envisaged that, from the first year of operation of the agreements, the two parties will share the overall operating result according to the level of activity shown by each company in the year 2000 (60% Air France and 40% Alitalia); this sharing will gradually be balanced out until it reaches 50% for both parties in the third year, and will remain at that level for as long as the alliance lasts.

As for the Cargo Business Agreement, this will enable Alitalia and Air France to define ways and means of developing all-cargo activities focused on the wealthiest traffic areas, with the aim of increasing profitability deriving from investments, as well as setting up useful synergy with the present cargo aircraft operators.

The specific contracts that make up the alliance agreement with Delta Air Lines include the Marketing Agreement which regulates collaboration in the commercial sector, the Code Sharing Agreement, the Frequent Flyer Program and the Lounge Usage Agreement.

In line with the logic of global code-sharing, Alitalia and Delta Air Lines will focus their attention on the optimisation of flight schedules as well as the improvement of connections between Italy and the United States; on the sharing of structures, where possible, at destination airports served by both; and on reciprocal participation in their respective frequent flyer programs.

Since closer forms of collaboration will generate increased benefits for all the parties concerned, Alitalia, Delta, Air France and Csa Czech Airlines will jointly define the terms of a quadrilateral agreement for routes between Europe and North America, which will involve requesting Antitrust Immunity from the DOT.

The definitive agreements will be submitted to the appropriate European Union authorities for evaluation and approval..

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