French shipping giant CMA CGM announced plans to take up to 9% of Air France-KLM’s ex post share capital. The transaction is to be financed by means of a capital increase of the airline. Once the deal is formally concluded, both players will jointly sell the cargo capacity of their respective freighter fleets. Their upcoming joint activities are based on a 10-year exclusive strategic commercial partnership to strengthen their air cargo activities.
The company’s joint announcement is a big bang in the logistics industry. This is because it could usher in a phase of cross-shareholding between shipping lines and cargo airlines. This development became apparent at the latest when shipping companies such as Moeller-Maersk or CMA CGM stepped into the air freight business by operating own freighter fleets. Freight forwarders also have recognized the signs of the times by operating their own cargo aircraft, as formerly exemplified by Panalpina and now done by Kuehne + Nagel for instance that signed a long-term charter agreement with Atlas on 17FEB22 to operate two Boeing 747-8F for better serving the agent’s supply chains in a customer-tailored manner. At the same time, the logistics giant has increased its stake in Lufthansa from five to just under 10 percent.
New window opened in multimodal logistics
But in comparison, CMA CGM's entry into Air France-KLM has a different, much bigger dimension: It creates a huge multimodal logistics heavyweight with strong footholds in all transport sectors. Thus, the joining forces of AFKLMP and CMA CGM is likely to serve as a role model for others to emulate.
In terms of the agreement, these parameters are clear:
Two actors, one voice to their customers
It is a long-term treaty, valid for at least 10 years. The acquisition of 9% of AFKL's capital by the shipping company is financed by an increase in the airline's capital. The freighter fleets will be jointly managed. They consist of 4 units operated by CMA CGM with outstanding orders for an additional 8 aircraft, 2 of which may be operated by Air France-KLM in the future, and 6 freighters belonging to AF-KLM’s fleet, with 4 more to come.
Both players will jointly market the capacity of the aircraft, including the lower deck compartments of AF-KL’s 160 long-haul passenger jetliners. They say that the pact will leverage both partners’ respective global sales teams, presenting one voice to the customer.
Whether this means that general sales agent ECS is out of the game, remains to be seen. At CMA CGM and AF-KLM nobody was available for comment. So far, the Paris-based service provider sold CMA CGM's remaining capacity on all freighter flights in close coordination with CEVA, the logistics arm of the Marseille, France-based shipping line.
Air France-KLM Group CEO Mr. Benjamin Smith said: “This strategic partnership is a landmark step which will significantly strengthen and expand the Group’s position in the air cargo industry. I am also extremely pleased that this commercial partnership with CMA CGM has resulted in their decision to invest directly in the Air France-KLM Group, demonstrating a strong testimony of their belief in the future success of our Group.”
Leader in integrated logistics
Rodolphe Saadé, Chairman and CEO of the CMA CGM Group stated: "This strategic partnership allows us to significantly accelerate the development of our air division, CMA CGM Air Cargo, and to position our two companies among the world's leading players in air freight.”
The executive added to this that the step is fully in line with CMA CGM's strategy and its ambition to become a leader in integrated logistics. “Through our stake in the company, Air France-KLM will be able to count on us to support its future development.”
Does the step affect their ITA bid?
Whether AF-KLM's marriage with CMA CGM will have any impact on the Franco-Dutch airline's intentions to acquire a stake in Italy's ITA together with its U.S. partner Deltas Airlines is questionable. This is because CMA CGM competitor MSC, together with Lufthansa, has expressed a high level of interest in acquiring a major stake in the Alitalia successor.
Following the announcement by the two French companies to merge their cargo activities, MSC and Lufthansa's chances of winning a contract with ITA are likely to have increased, market observers
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