Corporate indigestion is as unpleasant as too many mince pies on Christmas day. So Monday’s denial by Air France-KLM of talks to buy more shares in Italy’s Alitalia – where it has held a 25 per cent stake since 2009 – should be welcomed. The Franco-Dutch carrier has plenty on its plate as it tries to stabilise finances and cut unit costs and fleet. Admittedly, there could be extra synergies from a tighter tie-up with the Italian airline medium-term. But now is not the moment to take on more politically sensitive downsizing in another recession-hit country.

True, investors might be tempted to look at Air France-KLM’s share price and assume that all is already hunky-dory. The stock has doubled from about €3 in June when overhaul plans were delineated and has outperformed the European airline industry by 50 per cent over the past year. But on an enterprise value to 2013 earnings basis, Air France-KLM now trades at a premium to the sector. That looks premature, leaving no room for error in a restructuring designed to return the lossmaking carrier to a 6-8 per cent operating margin – only in line with peers – by 2015. Net debt fell from €6.5bn at end-2011 to €6bn by September, but needs to come down to €4.5bn by end-2014. More than 1,000 full-time equivalent jobs have been shed at Air France, from 2011’s 72,000. The 2014 target, though, is under 66,000.

Moreover, while Europe’s low-cost carriers have remained disciplined in terms of capacity, they are not about to give bigger rivals an easy ride. KLM’s strategy includes expansion in Scandinavia, where LCCs, including Ryanair, pose strong competition. On Monday, easyJet, which has been expanding regional bases in France, posted 6.7 per cent passenger growth for 2012: Ryanair, 4 per cent. (Load factors were stable or higher). Full-cost rivals with much work to do may struggle to land smoothly.