Air France has won conditional permission from the European Commission to purchase Dutch carrier KLM and create the world's biggest airline group in terms of revenue.
'The European Commission has authorised the concentration between Air France and KLM after the companies successfully resolved concerns about reduced competition,' the EU executive said in a statement.
The Commission said its biggest concerns in what it called the 'first real merger in the European airline industry' had been on routes between Paris and Amsterdam, and Europe and the US. The airlines agreed to give up 94 single take-off and landing slots a day.
'This will enable rival airlines to start a service where competition would have been eliminated or significantly reduced', said the Commission, charged with protecting competition in the 15-nation EU bloc. The deal has yet to be approved by the US Justice Department.
The approval comes a decade after Air France nearly went bankrupt, staying alive only because it won permission from the Commission to receive 20 billion French francs - about €3 billion - in aid from the French government.
Air France aims to group the two carriers under a united holding company called Air France-KLM. It would move ahead of Japan Airlines System Corp as the largest airlines group by revenues and rank third behind American Airlines and United Airlines in passenger traffic.
The French state would own 44%, other Air France shareholders 37% and current KLM shareholders 19% in the enlarged company. Air France and KLM will retain their national identities, brands and hub airports.
Italy's Alitalia also wants to join Air France-KLM but the two airlines have said it must first be privatised and strengthen its finances.
The tie-up would bring KLM into the SkyTeam alliance, led by Air France and Delta. KLM's longstanding alliance with Northwest Airlines and their three-way partnership with Continental Airlines opens the door for those US carriers to also join SkyTeam.
