The Air France-KLM/Alitalia tie-up covers passenger services between France, Italy, the Netherlands and beyond—as well as the marketing, sales and distribution of Alitalia’s belly capacity, currently performed by Air France-KLM.

Alitalia said the Air France-KLM partnership and ancillary joint venture (JV) agreements were signed “under very different economic circumstances” in 2009 and 2010, before being transferred to the new Alitalia in January 2015. As part of this transition, Etihad Airways took a 49% stake in Alitalia. Air France used to be a key Alitalia shareholder, but now holds less than 1% of the Italian airline.

“These agreements are no longer beneficial, either commercially or strategically, to the new Alitalia and its ambitious turnaround plan. They were negotiated when Alitalia was in a very different position, with the result that the agreements in their current forms favor the other party,” Alitalia CEO Silvano Cassano said.

He added the agreements are “undermining” Alitalia’s efforts to restructure its network, aimed at winning back traffic and supporting the Italian manufacturing industry’s cargo needs.

As part of its reinvention, Alitalia has joined Etihad Airways’ network of equity partners that includes airberlin, Air Serbia, Air Seychelles, Etihad Airways, Etihad Regional operated by Darwin Airline, Jet Airways and NIKI.

“We have indicated to Air France-KLM that we are willing to discuss more equitable arrangements that benefit all the parties involved, but thus far we have been unable to achieve this result. We remain open to further discussions to achieve a mutually acceptable solution. However in the interest of transparency and certainty for all parties, we felt it necessary to announce our intention not to renew these agreements under the present conditions,” he said.

It is unclear what, if any, implications Tuesday’s announcement has for Alitalia’s SkyTeam membership and its transatlantic joint venture with Air France-KLM and Delta Air Lines.

An Air France-KLM spokesperson told ATW in an emailed statement: “Air France-KLM is currently holding discussions with Alitalia to see how they can cooperate in the future in Europe. The agreements under the European JV between AF-KLM and Alitalia still applies until January 2017.”（By Victoria Moores）