Alitalia rescue plan may have to wait for EU approval

Airline Industry Information, Sept 28, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

Italian airline Alitalia may have to wait for European Union approval of its proposed restructuring plan which was crucial in it winning access to a EUR400m rescue loan.

The airline has union agreement on the plan to split the company into two separate units, AZ Fly and AZ Service, at a cost of over 3,000 jobs but now must wait on an EU check to make sure that no more state aid is involved and that the Italian government will cut its 62% stake down to 49%.

EU Transport Commissioner Loyola de Palacio said that she hoped to review the plan before the end of her term but that it might not be possible. Other EU carriers claim that the plan would see the AZ Service unit loaded with debt and then sold to the state, reports Reuters.

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