On Wednesday, February 11th 2004 the merger that would create the worlds third-largest airline was approved by the European Commission and the U.S. Department of Justice. Air France and the Netherlands-based KLM plan to operate two carriers under a single holding. The two airlines have agreed to form a joint holding company under which the Air France and KLM brands would co-exist for three years. Under the agreement KLM will retain its foreign landing rights even though it will join a French-led holding company.
The company, Air France-KLM, will own 100 percent of both airlines but KLM will remain Dutch, with 51 percent of its voting rights held by the state and two foundations.
Air Frances takeover of KLM will bring the Dutch carrier into the SkyTeam alliance, currently the worlds third largest. The product of the Dutch KLM and Air France merger may get even bigger as Italian airline Alitalia seeks Commission approval to join. But even if Alitalia does not come on board, the initial merger will create a competitor for European airline leviathans British Airways and Lufthansa. Additionally, KLM has alliances with Northwest and Continental airlines, while Air France has one with Delta.
KLM is a Dutch-based full-service carrier
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