Italy Said to Near Rescue of Alitalie by Postal Service
Italian Prime Minister Enrico Letta is close to sealing a rescue package for Alitalia SpA that involves the national postal service taking a stake in the carrier, four people familiar with the matter said.
An accord brokered by the government may be announced as soon as today, said the people, who asked not to be named as the matter is private. Poste Italiane SpA may contribute 75 million euros ($102 million) to a 300 million-euro capital increase, one of the people said. The agreement remains tentative and may still break down, the people said.
Enlisting the help of the postal service would support Chief Executive Officer Gabriele Del Torchio in securing fresh financing that trade union executives said yesterday is approaching half a billion euros ($676 million). Letta has favored the support from a state-owned entity to stabilize the carrier, whose resources have been depleted by mounting losses and competition from low-cost carriers including EasyJet Plc. (EZJ)
“Alitalia needs a capital injection or on Saturday it will remain on the ground,” Vito Riggio, head of Italian civil aviation authority Enac, told television channel SkyTG24 in an interview.
The measures being discussed include the proposed capital increase, which is three times the amount the carrier had sought earlier, and a bank loan of about 200 million euros, union officials said yesterday after meeting the carrier’s CEO.
Spokesmen for Alitalia, the postal service and the government declined to comment.“Alitalia in on the verge of bankruptcy,” the carrier’s unions said in a joint statement today. “The company is not self sufficient and its investors can’t guarantee it will continue to operate.”
Letta met with Alitalia representatives and some of its investors and creditors this week in a bid to avert a collapse. Compounding Alitalia’s woes is a threat by energy company Eni SpA (ENI) to halt fuel supplies in two days unless Alitalia shows it is able to continue operations. Air France-KLM Group (AF), the biggest shareholder, has been reluctant to take on the role of savior in a rescue operation.
Alitalia’s board, originally scheduled to meet in Rome today, will instead convene tomorrow. Italy’s aviation authority also summoned the executives to a meeting in Rome today and said afterwards that the company displays “economic-financial stress,” while there are “positive signs’ regarding the airline’s operations security.
Alitalia’s board on Sept. 26 approved a capital increase of least 100 million euros because its cash has dwindled following the heavier first-half net loss. The priority is to resolve the cash shortage through new financing and a capital increase before combining with an international player, people familiar with the proposed rescue plan have said.
Losses at the Rome-based carrier swelled to 294 million euros in the first half and reserves fell to 128 million euros from 159 million euros at the end of the first quarter.
Air France-KLM, which holds a 25 percent stake in the company, said last month that it needs more information from Alitalia before it can decide its next move. The French carrier is under pressure itself to cut costs, and its French subsidiary plans to eliminate 1,826 ground-staff jobs through voluntary employee departures to address weaker demand.
Alitalia was put into bankruptcy in 2008 after political and labor opposition thwarted attempts to sell the company, which was almost 50 percent state-owned. A group of investors, including Intesa Sanpaolo SpA (ISP), Italy’s second-biggest bank, and Atlantia SpA (ATL), its No. 1 toll-road company, bought the carrier’s main assets and combined them with smaller competitor Air One SpA before selling the stake to Air France-KLM.