Transportation Industry

Company Watch - Alitalia

AirGuide Business, May 5, 2008

May 5, 2008

Alitalia's nine unions have been invited to meet representatives of an unidentified group of investors interested in buying the government's stake, Italian media reported. Pirelli Chairman Marco Tronchetti Provera indicated that the Milan-based multinational, best known for its tires, is ready to invest in either an Italian consortium that would take over Alitalia or in Milan Malpensa, Thomson Financial reported. Apr 30, 2008

Italian Prime Minister-elect Silvio Berlusconi yesterday threatened to re-nationalize Alitalia if the European Commission continues to question the [euro]300 million ($469.1 million) bridge loan the outgoing government granted the virtually bankrupt company last week. Apr 30, 2008

Alitalia filed a counter-claim for damages against Milan's airport operator SEA on Wednesday, raising the stakes in a bitter battle over the ailing carrier's sharp cutback in flights from Italy's financial hub. The Italian national carrier charged SEA with not investing enough at Malpensa Airport near Milan and damaging Alitalia's sale prospects by suing it over the flight cuts. SEA said its lawyers would examine Alitalia's claim, but a first glance showed "serious errors in reconstruction of facts." Alitalia said the damages it was seeking were "not far" from the EUR1.2 billion euros sought by SEA in its lawsuit filed in February, when the carrier was trying to seal a doomed takeover by Air France KLM. That deal ultimately fell apart over union opposition, but the French carrier had also wanted the lawsuit by SEA withdrawn as a precondition for completing the takeover. May 1, 2008

Alitalia's decision to cut flights out of Malpensa by 70 percent stemmed from a restructuring plan it drew up last year to reduce losses, which caused an outcry from Milan politicians and officials worried about job losses in the area. Milan has since struck a deal with Germany's Lufthansa, which will nearly double the number of weekly flights from Malpensa, while Alitalia is still searching for a buyer. The carrier is expected to survive over the next couple of months thanks to a EUR300 million emergency loan from the government, but its long-term future remains unclear. The airline on Wednesday reported the short-term liquidity available remained stable at EUR180 million and that net debt shrank 1 percent due to proceeds from the sale of its stake in Air France KLM. Italian Prime Minister-elect Silvio Berlusconi has promised a home-grown consortium to buy the carrier will soon reveal itself, but so far no-one with concrete plans to rescue the airline has emerged despite constant speculation on the matter. Italy also faces the threat of being taken to court over the loan, with the European Commission warning it has doubts on whether the lending falls outside rules barring further state aid to Alitalia. May 1, 2008

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