Alitalia gets €500m rescue package
ALITALIA has secured a €500m rescue package from shareholders, banks and the state-owned postal service to avert a collapse of the airline that is losing more than €1.5m a day.
Board members backed a plan to raise €300m by offering new shares to existing investors, the Rome-based company said on Friday. Air France-KLM Group, the biggest investor with a 25% stake, said its representatives agreed to support the measure to “enable continued operations at Alitalia”.
The intervention of the government to rescue the airline for the second time in five years comes as Italy, the euro region’s third-largest economy, struggles to emerge from the worst economic slump since the Second World War and at the same time meet the European Union budgetdeficit target of 3%.
Italy’s postal company Poste Italiane agreed to contribute €75m for Alitalia, while the country’s two biggest banks — UniCredit and Intesa Sanpaolo — will guarantee as much as €100m for eventual unopted rights in the capital increase. They will also provide a €100m bridge-to-equity loan, according to a release issued late on Thursday.
Alitalia shareholders will meet today to approve the financing package. Air France-KLM still has not committed to participating in the capital increase, which needs backing from its own board. The company has been reluctant to inject more money into the ailing Italian carrier as Air France-KLM itself undergoes a restructuring and job cuts.
Pairing Alitalia and Poste Italiane would offer business links ranging from Poste’s charter company Mistral Air to cargo services, the government said on Thursday. Alitalia needed “renewal, stable shareholders and a significant restructuring through a new business plan”, Prime Minister Enrico Letta’s office said. “Poste’s entry is based on these conditions.”
The state intervention, aimed at averting a collapse that Italy’s civil aviation authority said could otherwise have occurred in a matter of days, also drew criticism.
“Italian taxpayers shouldn’t be paying money to ensure that Alitalia’s partners get out of this mess without too much pain,” Bruno Leoni research director Carlo Stagnaro said in Turin. “The only economy of scale between Poste and Alitalia is that a lot of layoff notices will be posted.”
Alitalia, which employs about 14,000 people, has been on the brink of collapse. It was put into bankruptcy in 2008 after political and labour opposition thwarted attempts to sell the airline, then almost 50% state-owned.
Alitalia’s resources have been depleted by mounting losses and competition from low-cost carriers. Losses at the Rome-based carrier swelled to €294m in the first half and reserves fell to €128m from €159m at the end of the first quarter.