Air France-KLM in ongoing talks with Air Europa on potential stake, CEO says

Air France-KLM is in talks to take a stake in Spanish airline Air Europa and is looking to boost its existing holding in Scandinavian carrier SAS to a majority, CEO Ben Smith told Reuters on Tuesday. "We've had a meeting with Air Europa," Smith told Reuters in an interview in Paris, confirming for the first time the French-Dutch carrier was interested in buying a stake. He added that it was also on track to increase its stake in SAS as the carrier was meeting the necessary milestones, including integration into the SkyTeam airline alliance, of which Air France-KLM is also a member. Smith declined to disclose further details about the nature of the Air Europa talks, or the size of either planned stake. In November, the airline said discussions were underway about commercial cooperation with Air Europa within the framework of the SkyTeam alliance, but it would not comment on any plans to acquire a stake. Some analysts have valued the airline at up to E1b. The stake sale would be aimed at raising funds to pay back government loans worth about E475m granted during the pandemic. German airline group Lufthansa is also interested in acquiring a minority stake. The stake sale would mark the next phase of the consolidation of Europe's fragmented airline industry, which executives say is needed to compete with U.S. and Middle Eastern rivals. Doing smaller deals rather than buying an airline outright would also help get regulatory approval and expand Air France's business in the lucrative southern European market. Air Europa flies within Spain and between Madrid and large cities in Europe and Latin America.<br/>