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12/19/1997
                              ALITALIA AND KLM A GLOBAL FORCE IN A
                                                  NEW EUROPE
 

                             ALITALIA AND KLM A GLOBAL FORCE IN A NEW EUROPE

                             Alitalia and Klm Royal Dutch Airlines have announced their intention to enter
                             into a strategic commercial alliance for both passenger and cargo air services.
                             This is set forth in a Memorandum of Understanding, which the two airlines
                             signed on December 18, 1997. Domenico Cempella and Leo van Wijk, the CEOs
                             of Alitalia and Klm, presented the alliance at a press conference earlier today at
                             Malpensa Airport in Milan, Italy.

                             The two airlines will develop the alliance through a multi-hub system based at
                             Schiphol Airport, Amsterdam, Malpensa Airport, Milan, and Fiumicino Airport,
                             Rome. The alliance will be based on long-term commercial agreements and will
                             not involve any equity participation.

                             Customers of the two airlines will benefit significantly from the alliance as Alitalia
                             and Klm will operate more direct European routes with higher frequencies.
                             There will also be more direct daily intercontinental flights from the Milan area
                             and there will be substantially more connections to secondary destinations from
                             the alliance's hubs. Sales and marketing activities for the alliance will be
                             strengthened by the combined presence of Alitalia and Klm in all relevant
                             European cities. Cargo customers will benefit from more frequencies and greater
                             capacity offered to more destinations, as well as from enhanced possibilities for
                             broad tailor-made customer contracts.

                             Under the arrangements, Alitalia is expected to join Klm's strategic partnership
                             with Northwest Airlines. One of the advantages will be better connections to
                             more US destinations from Italy. The alliance is expected to commence in
                             November 1998, shortly after the opening of a modern and completely remodeled
                             Malpensa Airport. The commencement of the alliance is also subject to regulatory
                             approvals and the execution of definitive alliance agreements.

                             The alliance's first priorities will be passenger services in Europe and across the
                             North Atlantic, and worldwide cargo services. Subsequently, passenger services
                             in other intercontinental markets will be enhanced. Over time cooperation will be
                             explored in other areas, including maintenance, fleet and information systems. In
                             the course of the coming years, Alitalia and Klm expect the alliance to generate
                             significant financial and consumer benefits.

                             Domenico Cempella, Chief Executive Officer of Alitalia said: "Klm is the best
                             strategic partner for Alitalia. This alliance with Klm offers the greatest prospects
                             for the continued strengthening of Alitalia."

                             Leo van Wijk, Chief Executive Officer of Klm said: "This is a landmark in the
                             history of European air transport. The alliance with Alitalia creates a high quality
                             multi-hub system with a key role for the new Malpensa hub." 

This message doesn' t include any reference to a very recent and fundamental milestone in American air transport right in the first months of 1998. After a few months treating with Delta Airlines, Continental Airlines has signed an agreement with Northwest Airlines for the sale of a 15% of its shares to the Minneapolis-based carrier. This agreement will soon turn into a code sharing program and in the future to a more intense cooperation in every sector of air transportation.
Through the coordination of Minneapolis, Detroit and Memphis hubs run by Northwest together with Newark and Houston-run by Continental, the new alliance will be truly able to threaten the "Big Three"-United Airlines, American Airlines and Delta-all allied with Star Alliance, British Airways and Swissair.

Talks with Malaysia Airlines are taking place to extend the alliance to South East Asia, while the choice of Jas for the Japanese market seems quite sure, as Jal and Ana seem more than secure about their alliance programs with Ba-Aa and Star Alliance.

Concerning the European market, Klm already runs an intense and profitable network of alliances with small european carriers that ensure a more complete coverage of specific markets.
Its partners are not only Klm Cityhopper and Klm Exel, whose role is to feed Amsterdam Hub, but also Klm Uk and Braathens SAFE for a complete coverage of British and Scandinavian markets.

Finally, the alliance is the only to cover also the African market thanks to Kenya Airways, of which Klm holds a share participation.

What' s still to see is how this young and relatively small group of airlines will be able to compete with the Big Ones, although they have already demonstrated they have the possibilities to succeed.

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