AccorHotels has Renewed its Interest in Taking a Stake in Air France KLM.

Date: June 2018…Updated July 2018

Location: France

What: The hotel giant confirmed it had held talks with the airline in recent years.
Air France is partly owned by the French government, which holds a 14.3% stake.

“AccorHotels confirms having resumed its reflections on the matter, being at very early stage of assessing the feasibility and potential terms and conditions which will be discussed with Air France KLM in due time,” AccorHotels said in a statement.

“There is no certainty that these initiatives will lead to any agreement nor any form of implementation.”

Air France has been beset by strikes this year, costing the airline more than €400 million. It total, there have been 15 days of walkouts since February, driving shares in the business down 50%.

French newspaper Les Echos on Sunday reported the government was considering selling its stake and confirmed it had received interest from AccorHotels.

Reuters reports neither Air France or the French government would comment, or KLM chief executive Pieter Elbers.

THPT Comment: How the tables have turned from the late 1960s when airlines developed and owned hotel companies…TWA with Hilton outside of the US, PanAm with InterContinental (IHG), SAS with Radisson, Canadian Pacific Railways with Fairmont, Aer Lingus with the London Tara Hotel, JAL with Nikko hotels, to allow their flight customers to stay in hotels they felt comfortable with!

…now we see this Accor interest, Arora Hotels offering to build the third runway for Heathrow Airport, Pestana Hotels of Portugal owns euroAtlantic Airways.

Interesting editorial from Tom Lowry, Editor of Skift, the following day…

A day after it confirmed it had an interest in buying a minority stake in Air France, AccorHotels on Monday received a crushing review of that idea. Investors punished its stock, as shares closed down 7 percent. That’s more than $800 million in market cap in a day.

This can’t come as a shock to CEO Sebastien Bazin and his executive team. Even with all the creative thinking behind earlier deals to extend beyond traditional hotel operations at Accor, owning even a small piece of Air France seems like pushing the envelope too far.

History is full of bad deals when companies decided to veer out of their lanes, even if this investment falls under the broader umbrella of travel. And Air France, with systemic labour problems and anemic profits, is the last airline any hotel chain should think about investing in.

Accor is about to come into lots of cash after selling its property assets. Share buybacks and paying down debt are not sexy and won’t win you any favours with French President Emmanuel Macron, who must certainly be pushing for a white knight investor for Air France.

By July 26th, Accor dropped it’s interest in pursuing this opportunity! citing “that required conditions for the acquisition of a minority stake in Air France-KLM have not been met at this stage, AccorHotels has decided not to further pursue this opportunity, the company said this morning.

“The group remains convinced that a strengthened partnership between hotel companies and airlines offers significant value creation potential,” Accor added in a statement.

Senior Hospitality Editor Deanna Ting analyses Accor’s motivations in our story today, but Bazin should just take a pass on this one.