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Air France KLM wants to be a consolidator of the airline industry but will do so only if this does not hurt its medium-term financial performance, the Franco-Dutch carrier's deputy head said.

Asked whether Air France KLM was still interested in an alliance with troubled Italian carrier Alitalia, Air France-KLM Deputy Chief Executive Pierre-Henri Gourgeon said: «Of course we are still ready to talk with Alitalia... But however interesting the matter is, we will go ahead with the project only if we have a clear vision that they will not hurt our medium-term performance.»

«If we can't see the possibility of continuing on the path of profitability at a three-year horizon, then too bad, we will not be able to pursue this (project),» he added, in a speech at shareholders trade fair Actionaria in Paris.

Alitalia seeks a buyer for the Italian Treasury's 49.9 percent stake in the loss-making Italian flag carrier after an auction for it collapsed in July.

Air France KLM did not take part in the original auction, citing unattractive conditions set by the Italian government, but was later named by Alitalia management as a potential buyer.

Gourgeon also repeated that Air France KLM was looking at Iberia but he declined to say whether it would join a bid battle for the Spanish carrier.

«Iberia is looking for something that could guarantee its future. They have the feeling that they need to merge with one of the big players,» he said.

«We are ready to move along with the consolidation process... After that, it is like a dance and it takes some time for the couples to form.»

Sources close to Air France have not ruled out a bid for Iberia but say any such bid would be a financial deal rather than an industrial partnership because the two airlines compete heavily on routes to Latin America.

British Airways has already expressed interest in Iberia, while Lufthansa has for months said the Spanish airline was too expensive.

On Thursday, a group of Spanish billionaires along with Spanish bank BBK made a takeover approach that values Iberia at up to EUR3.7 billion euros (USD$5.4 billion).

Gourgeon downplayed risks that surging oil prices and a weakening of the dollar could affect Air France KLM's profitability.

He said its fuel hedging policy had been «efficient» to reduce the impact of rising oil prices and added that fuel taxes on tickets had allowed the airline to match the gradual rise in oil prices with the gradual rise in ticket prices.

The weakening of the dollar was not negative for the airline, Gourgeon said.

«When the dollar goes down, we are benefiting from it since we have more dollar costs than dollar revenues,» he said.

«But if the euro goes up against all other currencies, then this is a different matter because then it is our yen revenues and our yuan revenues that are falling.»

(Reuters)