Troubled Italian carrier Alitalia has agreed to be bought by rival Air France for a cut-price 138m euros(£106m:$215m) in a move to save the state airline.
The Italian government, which holds 49.9% of Alitalia, failed to sell the company by auction in 2007.
Alitalia will maintain its national identity within the Air France-KLM group after the takeover, which could be completed by mid-2008.
This will be good news for the Skyteam alliance which is fast becoming a major player in Europe. With this tie up, a OneWorld British Airways-Iberia tie up could be on the cards sooner rather than later, especially taking into consideration consolidation elsewhere with Lufthansa and Swiss.
Consolidation has been required in European aviation, hopefully Air France-KLM can reform Alitalia to reduce its cost base and phase out some older, less fuel efficient aircraft. Europe, for once, may well be setting the pace when it comes to the US aviation market. Talks of a Northwest-Delta merger and United-Continental have quietened down in recent weeks, but never say never.
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