Tarom privatisation, veiled by air giants' mergers

The fever of mergers between air companies, which has spread to British Airways and KLM Royal Dutch on one hand, and American and Delta Airlines on the other, is likely to make even less visible the privatisation of Tarom, a company analysts consider to have too small a turnover to be taken seriously by world titans.

“For the moment, large aeronautics companies are focusing their attention on alliances rather than on laying hands on markets of Central and Eastern Europe by taking over companies of Romania or Bulgaria,” Ron Atkinson, an analyst with Merrill Lynch, told Ziarul Financiar.

Aleodor Francu, a secretary of state within the Transports Ministry, says that aviation alliances “are done and undone at a quite alert pace.”

“Each air company is trying to stick to a powerful group so as to manage and stay on the market”, Francu says. He says that, for Tarom, Romanian authorities have in view attracting a strategic partner “that would operate a capital raise within the first stage.”

“We do not operate privatisations for the sake of privatisation,” the Transports Ministry official says.

British Airways and KLM Royal Dutch confirmed on Wednesday that they opened negotiations with a view to a potential merger about which analysts say it would be led by the British operator. The merger, once accomplished, would turn the two companies into the largest European operator.

“For the time being, there is no guarantee that preliminary discussions will be finalised through a fusion,” shows a press release issued by the two companies.

Together, KLM and British Airways might register turnover worth over 19 billion dollars, as compared to 17 billion dollars, the turnover posted by Lufthansa, another aeronautics giant. Analysts estimate KLM’s market value at about 1.2 billion dollars.

Comparatively, Tarom registered last year turnover standing at approximately 300 million dollars. According to Romanian authorities, the company’s market value amounts to about 300-500 million dollars.

“It is quite certain that, at the present moment, aeronautics giants are trying to form an alliance or to merge with smaller companies to the end of holding control,” Atkinson says. Analysts think that, in case these discussions are successfully finalised, the public opinion will witness the birth of the European leader within the field, which, at least as regards passenger traffic, will outrun Lufthansa, Air France or AlItalia.