Air France and Airbus obtain global clearance for their A350 component maintenance services JV

Compass Lexecon advised Air France/KLM and Airbus with a competitive assessment of their proposed Joint Venture dedicated to component maintenance services for A350 aircraft. The transaction was subject to regulatory approvals in multiple jurisdictions, including the European Union, Turkey, China, Egypt, and South Korea. The European Commission, the Turkish Competition Authority, the Chinese SAMR and the Korea Fair Trade Commission granted unconditional clearance. The review is still ongoing in Egypt.

Situation

Airline operator Air France KLM and aircraft manufacturer Airbus started exclusive negotiations to create a Joint Venture for the provision of component maintenance services for airlines operating A350 aircraft globally. The partnership would take the form of a 50-50 JV, covering services such as supply chain management, repairs, and creation of a worldwide pool of aircraft components.

Our role

We provided support for the competitive assessment of the transaction and Phase I review by the European Commission and in other relevant jurisdictions. We assisted with the calculation of market shares, a review of the Parties’ bidding data and the assessment of efficiencies unlocked by the JV formation.

The A350 aircraft comprises thousands of parts, which can be repaired by different maintenance providers. Building upon the Parties’ knowledge, we developed a methodology enabling a market reconstruction at component level, thus identifying for each aircraft of the existing A350 fleet the provider in charge of the maintenance of each component and the value that these components represent in terms of maintenance services.

This granular and versatile approach has been used to derive accurate value-based market share estimates according to various market definition variants and across different jurisdictions. It allowed addressing requests from various regulators as part of multi-jurisdictional filings in a fully consistent way.

In parallel, we collected and analysed bidding data, to assess the competitive constraints that the Parties would face post-Transaction. We also undertook an assessment of the efficiencies permitted by the Transaction, including component pool optimization allowing enhanced service quality, as well as geographic footprint synergies enabling reduced transportation costs, lower lead times and a reduced environmental impact.

Outcome

The European Commission cleared the transaction at the end of April, concluding that the notified transaction would not raise competition concerns as the JV would “continue to compete against several credible competitors, including other component manufacturers and providers of component maintenance services for the A350 aircraft, as well as airlines carrying out the repair of components used in their own fleets.”. In addition, it also acknowledged that the JV’s claimed efficiencies were likely to be merger-specific and beneficial to customers – but did not have to complete their assessment to grant clearance.

The Chinese and South Korean authorities gave their green light at the end of May and beginning of June, respectively, whilst the Turkish competition authority had previously granted clearance in February 2026. The review is still ongoing in Egypt.

The team

The Compass Lexecon team, headed by David Sevy and Jeremiah Juts, included Hippolyte Brosse, Valerio Serse, Santiago Fiallo-Acevedo, Julie Klein and Hilaire Bethouart.

They worked with Air France’s and Airbus’s joint external counsel DLA Piper, led by partner Edouard Sarrazin with support from Julie Brousseau and Louise Riberat.