Alitalia Said to Delay Capital Increase as Air France Holds Out

Alitalia SpA plans to postpone a capital increase as it seeks support from investors, with its biggest shareholder, Air France-KLM (AF) Group, still opposed to participating, two people familiar with the matter said.

The Italian airline is set to extend the Nov. 14 deadline by as long as 10 days and will discuss its rescue package at a board meeting tonight, said the people, who asked not to be identified because the discussions are private. Air France-KLM, which owns 25 percent of the Rome-based carrier, doesn’t plan to buy new shares, another person said.

Alitalia needs fresh funds after losses piled up and reserves dwindled. Italy’s government has brokered a rescue package that includes the 300-million euro ($402 million) capital increase, with the state-owned postal service contributing 75 million euros and backing from the country’s two largest banks. In return, Alitalia management is willing to cut about 2,000 jobs, people briefed on the talks have said.

The measures are still being discussed and a final decision on the number of job cuts and saving has not yet been made, they said. Spokesmen for Alitalia and Air France-KLM declined to comment.

The board, which is scheduled to meet at 7 p.m. in Rome, will discuss a saving plan for about 250 million euros, which includes the job cuts, two of the people said.

Even a 10-day delay may not be sufficient to persuade Air France to inject fresh money into the Italian company via new stock, one person said. Air France, which paid 323 million euros for its stake in 2009, has lost 96 percent of its investment since, and the French carrier is working on a savings program of its own to rein in costs.

The delay may facilitate Poste Italiane SpA’s investment before a final step-back from Air France as Alitalia Chief Executive Officer Gabriele Del Torchio seeks a new international partner, two of the people said. Alitalia was valued at 50 million euros before the capital increase and the new stock is being offered at a 40 percent discount to the market value.

Air France-KLM would be willing to invest in Alitalia only if the Italian carrier agrees to a broad restructuring that would include jobs cuts as well as a reduction of debt, Chief Executive Alexandre de Juniac said this month.

To contact the reporters on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net; Andrea Rothman in Toulouse at aerothman@bloomberg.net; Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.