September 10, 2004
A Tale Of Two Hubs - The Root Of Alitalia's Woes?

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Years of reliance on state bailouts and spiralling costs are two reasons Italy's Alitalia is in dire straits. But another major problem is the Italian carrier's failure to develop a real hub, analysts say.

With less than a week before next Wednesday's deadline to agree a restructure plan to save Alitalia from collapse, the airline's dual-hub problem has not been addressed.

Chief Executive Giancarlo Cimoli has said his rescue plan will split the airline into two separate entities, shed a quarter of the 20,000 workforce and inject fresh capital.

But he has said nothing publicly about hubs -- a political minefield for the flag carrier for more than a decade.

Whereas Air France is undoubtedly Paris-based, and Lufthansa's home is Frankfurt, Alitalia has a split personality, with hubs in both Milan and Rome.

Most European airlines operate a "hub and spoke" network, feeding traffic through their main airport, providing a maximum number of connections from their aircraft fleet.

But Italy's notorious north-south divide, with politicians vying to keep the jobs and prestige that accompany an airline hub in their constituencies, has prevented Alitalia from creating a single center for its network.

From a purely commercial point of view, many industry experts say Alitalia should base its network in Milan, the rich northern city which is Italy's business capital. "The most profitable long-haul traffic would be point-to-point out of Milan," said Chris Avery, airlines analyst at JP Morgan.

LOSING OUT TO COMPETITORS

Business travelers in particular are unwilling to travel south to Rome for a long-haul flight if they can get a direct service from Milan.

"That is why the northern business traveler has been such a goldmine for Air France, Lufthansa and historically Swissair," Avery said.

A former Alitalia boss says political squabbles in a country riven with regional rivalries has prevented the airline creating a single hub.

"If Alitalia has ended up in this state, it's not the unions' fault," said Domenico Cempella, chief executive for five years until February 2001.

"The shareholder, the government -- and every successive government in recent years -- is responsible for a situation in which people's own interests have prevailed over those of the country or of Alitalia," he said in a recent interview with La Stampa newspaper.

"The government decided to move the business to where the market was strongest; in the center of Europe, [Milan] Malpensa. But then there were problems with local authorities, with complaints from the south, with Rome that didn't want to know. In short, problems with politics."

POLITICAL DIVIDE

During Cempella's time at Alitalia, a proposed merger with Dutch airline KLM collapsed at least partly over the failure clearly to plump for Milan as the Italian hub.

KLM has since merged with Air France and there is a possibility a new-look Alitalia could join them.

Many travelers say Malpensa itself is a problem, and that the 40 km (25 mile) out-of-town location should never have been chosen as a hub to draw busy business customers used to the older Linate Airport just on the city's outskirts.

Any attempt to change the status quo will cause a political storm.

Two government parties are on opposite sides of the debate with the Northern League supporting Milan's interests and the National Alliance's natural home being Rome and the south.

(Reuters)

Its quite sad actually.......I hope Alitalia will somehow resolve their financial problems....

Alitalia unions demand government talks
By Tony Barber in Rome
Published: September 13 2004 17:52 | Last updated: September 13 2004 17:52

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Italian trades union leaders on Monday made clear they were unlikely to accept a management rescue plan for Alitalia unless the government intervened in the crisis, as the deadline to save the airline from collapse loomed.

Leaders of the CGIL, CISL and UIL, Italy's three largest unions, said they wanted direct talks with Giancarlo Cimoli, Alitalia's chief executive, and with government ministers on the proposal to split the company into two units and cut 5,000 jobs.

Mr Cimoli has said on several occasions in recent weeks that Tuesday is the deadline by which the unions must accept the plan and new, tougher work contracts, because Alitalia has only enough cash to continue operations until the end of September.

"We have decided to continue negotiating with the company," Savino Pezzotta, the CISL leader, told reporters after a meeting of union leaders. "But we are asking for a meeting this week with the chief executive and then a meeting with the government."

Union leaders, aware how close Alitalia is to the brink, have refrained from threatening strikes in response to the management's proposals but they are hoping that a last-minute intervention from the government - which owns 62 per cent of the airline - will soften the impact of any job cuts.

Of the 5,000 staff under threat, more than 1,000 are old enough to be offered early retirement. Others said they had heard that some workers could be offered jobs elsewhere in the public sector but government officials declined to confirm such plans were afoot.

The government regards agreement on the rescue plan as a condition for releasing a €400m ($490m) emergency loan for Alitalia.

Alitalia's share price rose on Monday by more than 6 per cent, to €0.236, in what traders said reflected widespread expectations in the market that a deal would be struck to save the airline.

Union negotiators representing Alitalia's pilots, flight assistants and ground staff are continuing talks with management on their new contracts, and the pilots said on Monday they were making some progress. Management is seeking improvements in productivity to bring Alitalia's pilots to the level of their colleagues at Lufthansa.

The talks at Alitalia coincide with the crisis at US Airways, which has filed for bankruptcy protection for the second time in two years, and announcements of 7,000 lay-offs at Delta Air Lines, the third biggest US carrier.

Saturday September 18, 8:54 PM
Alitalia, flight attendants agree accord on job cuts

(AFP) Alitalia management and flight attendants struck a crucial deal on job cuts that would allow the struggling airline to keep flying, but management still needs to win government support for its overall strategy.

The deal, signed at dawn, would slash cabin personnel costs by 110 million euros (134 million dollars) and cut 900 cabin crew, union sources said -- opening the way to a privatization next year of the heavily indebted Italian state carrier.

Originally management had proposed reducing cabin crew staff on short term contracts by 1,050. The unions had hoped to limit the losses to 700.

Alitalia has already reached agreement with pilots and ground staff on measures to keep it aloft.

The accord was reached after management early Friday set the unions a 24-hours to conclude an agreement.

There was no confirmation on the deal from Alitalia managers.

The firm's directors are to meet on Monday to give official endorsement to a rescue package that would enable the company to draw on a 400-million-euro government-backed bridging loan that is critical to its future.

The unions have insisted on the accord and the rescue package being formally approved by the government, which owns a 62.39 percent share in the company.

State measures to deal with the consequences of the job losses are likely to cost between 90 and 100 euros, according to the daily Repubblica.

Labor Minister Roberto Maroni said that "a few days" would be needed to examine the package but that it was likely to be presented to the next cabinet meeting on September 25.

The Italian flag-carrier, which has lurched from crisis to crisis for years and nearly collapsed earlier this year, currently employs about 20,700 people full time in addition to a large contingent of temporary staff.

This latest and perhaps most critical deal foresees flight attendants flying more hours and reducing the number of cabin crew on medium-haul flights from four to three, the sources said.

Overall, job losses at Alitalia will be around 3,700 out of a total workforce of 20,700. Management had originally demanded cuts of 5,000 in all three categories.

Alitalia is trying to save 315 million euros by reducing its labor costs through a restructuring plan that runs from 2005 to 2008.

On Wednesday, the airline reached an accord with pilots calling for increased flying time, a cut in the number of pilots assigned to certain routes and the elimination of 289 jobs.

On Thursday, the carrier said it had reached a wage-freeze agreement with ground personnel in exchange for a reduction in the number of job cuts to 2,500 from 3,500.

For the past four weeks, unions and management have been locked in talks aimed at rescuing Alitalia, which has a fleet of around 180 planes and carries 22 million passengers a year. But its cash reserves have been rock-bottom, with management saying it could run out of money by the end of the month.

Alitalia has already said it plans to transfer 250 pilots and 500 flight attendants from Rome to Milan, where it does most of its business. Some 11,000 Rome-based staff currently commute to Milan, at a high cost for the airline.

The company said on July 30 that it had incurred losses of 330 million euros (400 million dollars) in the first half of 2004, after posting a net loss of 519.2 million euros for all of 2003.

The company has not made an operating profit since 1999. Its share value has declined by more than 90 percent since early 2000.

Sunday September 19, 8:43 PM
EU transport chief hails Alitalia accord

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BRUSSELS (AFP) - EU transport and energy commissioner Loyola de Palacio hailed the accord reached between Alitalia management and staff on a major restructuring plan aimed at keeping the struggling airline in the air.

"The Italian government has informed me of the positive outcome of negotiations between Alitalia and its social partners," De Palacio said in a statement Sunday.

She said the accord was a first step toward rebuilding the ailing company and ensuring its viability.

"I welcome the fact that everyone acted responsibly in this case," she said.

The deal, signed at dawn Saturday, would drastically cutting cabin personnel costs by 110 million euros (134 million dollars) and cut 900 cabin crew, union sources said -- opening the way to a privatization next year of the heavily indebted Italian state carrier.

Originally management had proposed reducing cabin crew staff on short term contracts by 1,050. The unions had hoped to limit the losses to 700.

Alitalia has already reached agreement with pilots and ground staff on measures to keep it aloft.

The accord was reached after management early Friday set the unions a 24-hours to conclude an agreement.

The European Union commission in July approved a 400-million-euro (495-million-dollar) bridging loan for Alitalia to help the airline stay aloft.

De Palacio said the commission would issue an opinion on the company's restructuring plan once the Italian government submits it.

Alitalia board approves rescue plan
Tue 21 September, 2004 07:53
By Phil Stewart

ROME (Reuters) - Alitalia's board has approved a four-year rescue plan needed to unlock a 400-million-euro (270-million-pound) emergency loan and prevent bankruptcy after unions agreed to thousands of job cuts.

But Alitalia's AZPIa.MI hopes to break Italy's flagship carrier into two parts were set back after labor leaders worried that the splintering of the state-controlled firm could send more workers to unemployment lines.

In a one-page statement with few details, Alitalia said its rescue plan would allow it to break even in 2006. Savings from its some 3,700 jobs cuts -- about a sixth of the airline's work force -- would be worth 280 million euros.

"(The plan) foresees a series of radical steps in every area with a substantial recovery in profitability through measures aimed at structurally reducing costs and increasing revenue generation," it said.

The agreement is a major milestone for the loss-making carrier, which warned that it was on course to exhaust its cash supply this month. Faced with the prospect of liquidation, Alitalia convinced unions to agree to job and wage cuts so that it could tap the emergency loan and keep flying.

But the airline said it would need more time, and meetings with unions, before it could finalize details on its future ownership structure as worries festered over the company split.

It appeared, however, that the loan would not have to wait, even if final reorganization plans were delayed. Alitalia said to expect "the immediate use of the 400 million euro bridge loan."

FORECASTS?

Still, important bottom-line details were largely lacking in Monday's statement.

Earlier this month, when Alitalia unveiled its original plan before union negotiations, the company had projected total benefits from restructuring of more than 1 billion euros by 2008. Revenue in 2006 would be 13 percent higher than in 2003, it said.

But these figures were not mentioned on Monday.

Alitalia did say that its margins of EBITDAR -- earnings before interest, tax, depreciation, amortization and aircraft rentals -- would be "equal to those of most noteworthy operators in the industry."

The airline's volatile shares closed 3.7 percent higher at 0.298 euro on Monday ahead of the board meeting. The stock has risen more than 30 percent in the last two weeks.

"The stock is like a number on a roulette wheel," a Milan-based trader said. "It's completely in the hands of the speculators."

Traders said it was retail investors, not institutions, who were moving the stock as well as Alitalia's convertible bond which rose 3 percentage points to trade at 83.28 percent of face value.

COMPANY SPLIT

Under the Alitalia plan unveiled earlier this month, the main airline unit would become AZ Fly, while other operations are spun off into a service unit called AZ Service.

Sources close to the talks say that the plan to split the company were still on track, but that unions want AZ Fly and AZ Service to be linked through a holding.

This is not part of the plan of Chief Executive Giancarlo Cimoli, who told unions earlier in the day he wanted Alitalia to be split entirely from AZ Service.

"Cimoli told us that AZ Service should be controlled by a different company and Alitalia will maintain a significant stake, but not control," said a union source, who declined to be named.

Alitalia's press office said that there would be a meeting at Prime Minister Silvio Berlusconi's offices, possibly later this week. Then more face-to-face talks would take place between Cimoli and union leaders.

The board said it, too, would meet again on September 28 to review financial results.

That's a really good composition of articles. I never thought about the problems Alitalia was having with its dual-hub structure. IMHO, they should hub where the money is, in Milan. Pleasing southerners and I suppose the federal government in Rome spreads their inability to compete further. Look at Germany, with long-haul flights concentrated out of Frankfurt (as opposed to Berlin).

the 60% of the tickets and the 70% of the money of Alitalia came every year from 3 Regions: Lombardia, Veneto and Piemonte, all North Italy.
but Alitalia have the HQ in Roma and the 22.000 workers are all located in Roma.
every months Alitalia transferd 11.000 workers from Roma to Milano in the morning and from Milano to Roma at the evening!
cause they haven't any base or HQ in Milano!
this is one of the reason of the Alitalia troubles.
but there are much more....

Copyright 2004 The Financial Times Limited
September 24, 2004
Asia Edition 1

Alitalia looks to revise Air France link
By TONY BARBER

Alitalia might seek to renegotiate the terms of its alliance with Air France and form a partnership with another Italian airline in order to improve its prospects for survival, Giancarlo Cimoli, chief executive, said yesterday.

Testifying to the Italian parliament, Mr Cimoli said Alitalia would almost completely run out of cash in one week, and that the airline's future depended on a rescue plan that involved splitting its flight and service businesses into two distinct companies.

Mr Cimoli was due last night to hold a meeting with trade union leaders who have accepted 3,700 job cuts, about one-sixth of Alitalia's staff, but who have objected to the proposed split.

Mr Cimoli said Alitalia wanted to continue its co-operation with Air France, under which the two airlines are partners in the SkyTeam worldwide alliance and each company holds a 2 per cent stake in the other. But he said Air France gained "certain advantages" from the alliance that needed to be discussed.

Although Alitalia has expressed interest in entering a merger with Air France and KLM, the French and Dutch companies have said Alitalia first needs to emerge from its financial difficulties.

In addition, they want the Italian state to carry out its promise to reduce its holding in Alitalia to below 50 per cent from its present level of 62 per cent.

Mr Cimoli also told legislators Alitalia was likely to soon announce an alliance with an Italian airline as a way of improving its efficiency and domestic market share, which has fallen this year to 45 per cent, well below the average for a European flag carrier.

Asked by reporters if he had in mind Meridiana, the airline that is partly owned by the Aga Khan, he replied: "It could be." Alitalia and Meridiana launched a wide-ranging code-sharing agreement in 1997, but it was cancelled by Italy's antitrust authority two years later on the grounds that it suppressed competition on domestic routes. A more limited code-sharing accord was later given the go-ahead. Tony Barber, Rome

Wednesday September 29, 2:02 AM
Alitalia says October 5 is deadline for job payoff deal

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MILAN (AFP) - Alitalia said that the government and trade unions had set a deadline of October 5 to reach agreement on social measures by the state to help staff who will lose their jobs in the carrier's relaunch program.

"October 5 is the limit" for finding an agreement, said Alitalia chairman and chief executive Giancarlo Cimoli, following a meeting between the government, unions and the airline's management.

Savino Pezzotta, secretary general of the CISL union, said: "The government should reflect anew about the instruments that it should use on the scope of the measures to take," not only for the company but for the entire aviation sector.

Alitalia and the unions representing its personnel have reached agreements in recent week on a restructuring plan aimed at saving the troubled carrier from bankruptcy.

As part of the plan, the state, which currently holds a 62.37-percent stake in the carrier, was to offer social benefits to ease the cutting of 3,700 jobs.

Alitalia is soon expected to have access to a bridging loan of 400 million euros (493.2 million dollars), issued by a bank and backed by the state, that should keep it aloft until its re-capitalization.

Budget sum adds twist on Alitalia
By Tony Barber in Rome
Published: October 2 2004 03:00 | Last updated: October 2 2004 03:00
Financial Times

The future recapitalisation of Alitalia, Italy's near-bankrupt airline, was put under the spotlight yesterday after it emerged that the Italian government has allocated €750m ($930m) for the air transport industry in its 2005 budget.

Government officials were not immediately available to comment on the intended purpose of the funds, but Giancarlo Cimoli, Alitalia's chief executive, has said his company needs to be recapitalised early next year to stay in business.

Alitalia is in the final stages of completing a rescue plan that involves the shedding of 3,700 jobs, the division of the airline into two companies, and the take-up of a €400m government-guaranteed emergency loan approved by the European Commission.

In the 2005 budget, which the centre-right government passed on Wednesday night, the sum of €750m appears under the heading "capital for companies in the air transport sector". Alitalia is planning a recapitalisation by next March of at least €1bn, and possibly up to €2bn, but any use of government funds in that may risk being branded illegal state aid by European Union competition authorities.

The government, which owns 62 per cent of Alitalia, has promised the EU that it will reduce its stake to below 50 per cent.

But in a deal last week between Alitalia's management and trade unions, Mr Cimoli said the government's stake would not drop below 30 per cent.

According to figures released by Alitalia on Thursday, net group debt amounted to €1.63bn at the end of August, compared with €1.68bn one month earlier.

The European Commission has yet to make a ruling on Alitalia's rescue plan. It is uncertain whether it will do so before November 1, when Loyola de Palacio, the Spanish transport commissioner, will be replaced by Jacques Barrot of France.

Thursday October 7, 1:34 AM
Alitalia rescue plan agreed after all-night talks

ROME (AFP) - Alitalia bosses and union and government officials forged a deal to save the troubled Italian flag carrier, but the company's restructuring plan immediately came under fire from rival airlines who complained of illegal state aid.

Government officials and both Alitalia sides emerged with an agreement in the early hours after thrashing out the fine details of redundancy payments for 3,700 workers who will lose their jobs in a restructuring plan.

Alitalia chairman and chief executive Giancarlo Cimoli said it guaranteed the company's future.

"We have laid the cornerstone, now we have to construct the building," said Cimoli, adding that the cost to the state of the five-year package would be around 300 million euros.

"I think that we obtained what we wanted, the continuation of the company," he said.

According to UIL union leader Luigi Angeletti, the deal "saves the company from failure. It's a good deal, the sense of responsability prevailed".

The agreement opens the way for the release of a 400-million-euro (490-million-dollar) state-guaranteed bridging loan for Alitalia, ensuring the company has sufficient cash until the launch of a capital increase expected early next year.

The company later announced it was postponing the release of its half-yearly figures, which had been due late Wednesday, to October 13. It said in a statement that it wanted to integrate the restructuring funds into its figures following the agreement.

But the agreement has angered the airline's low-cost competitors across Europe. They complained in a letter to the European Commission that the restructuring plan constitutes illegal state aid.

Alitalia and the unions representing its personnel had already reached agreements on new work contracts and a restructuring plan under which the company is to be split into two units -- ground service and flying operations.

But the final hurdle to agreement, settling the issue of compensation for those who will lose their jobs under the controversial plan, was finally overcome only after the all-night talks.

Shares in the carrier were sharply up in early trading Wednesday, the company showing a gain of 4.77 percent to 0.2965 euro.

In order to secure the deal, Social Affairs Minister Roberto Maroni proposed that those put out of work in the process should receive unemployment benefits for two years and then redundancy payments for three years, union sources said.

Any top-up payments will be up to the companies and workers involved, the minister said.

Maroni said however that Alitalia's real test lay in its ability to win back customers.

The deal was "a point of departure, not an arrival. I don't know if Alitalia has been saved, I hope so. This deal makes it possible to put the restructuring plan in place but then the company will have to face the market," he told Radio 24.

The government holds a 62.39 percent stake in the company, which is 1.6 billion euros in debt.

Meanwhile, a group of low-cost European airlines have written to the European Commission arguing that Alitalia's restructuring amounts to illegal state aid, the Financial Times reported.

Ryanair, Air Berlin and Wizz Air complained that any shift of liabilities between the company's ground service unit and its flying operations would be tantamount to state aid, the paper said.

In the letter to Transport Commissioner Loyola de Palacio and Competition Commissioner Mario Monti, they warned that "any form of state aid to Alitalia will be subject to an official challenge."

Thursday October 14, 11:29 PM
Alitalia Reports Losses for 1st Half 2004

Struggling Italian carrier Alitalia said it lost 620 million euros ($767 million) in the first half of the year, almost double the airline's 315 million euros ($360 million) losses for the same period the previous year.

In a statement issued late Wednesday, Alitalia also said it is seeking 1.2 billion euros ($1.5 billion) in fresh capital as part of a restructuring plan aimed at saving the airline.

Alitalia shares dropped up to 12 percent in early trading Thursday on the Milan stock exchange.

Alitalia said in the first half of 2004 it booked 167 million euros ($206 million) in costs for planned job cuts and 122 million euros ($151 million) for the spin off of its ground operations, two prongs of the restructuring plan the company is pursuing.

Labor unrest, higher fuel prices and increased competition from low-cost airlines have added to Alitalia's problems during the first half of 2004.

Alitalia said in the statement that it is in "advanced" talks for state-controlled industrial holding company Fintecna to take an undisclosed stake in Alitalia's ground operations, which will be called AZ-Servizi.

In recent weeks Alitalia reached an agreement with labor unions over a plan to cut some 3,700 jobs and separate the airline's ground service operations from its flight business, to be called AZ-Fly.

Approval of the plan was the condition for a 400 million euro ($496 million) bridge loan Alitalia signed on Monday.

Alitalia has posted an annual profit only four times in the last 16 years.

Friday October 15, 11:16 PM
EU Starts Review of Alitalia Rescue Plan

European Union regulators Friday started scrutinizing Italy's latest restructuring plan to save struggling national airline Alitalia SpA.

"We have received the information from Italy and we intend to start work on it straight away," said Amador Sanchez-Rico, a spokesman for the European Commission. It has two months to make a decision.

Italy's plan includes splitting the airline's flight and ground operations and a capital injection of more than $1.2 billion together with thousands of layoffs, according to Alitalia.

Italy has made a separate filing on a controversial proposal for state-controlled industrial holding company, Fintecna, to take a stake in Alitalia's ground operations, which will be called AZ Servizi, Sanchez-Rico added.

Alitalia said that after the spin-off, the air operations, which will be called AZ Fly, will be responsible for redeeming the group's medium- to long-term debt and the $480 million bridge loan.

Under EU rules, Italy must get approval from the European Commission before the measures can be implemented.

Alitalia said Wednesday it lost 620 million euros ($767 million) in the first half of the year, almost double the airline's loss of 315 million euros for the same period the previous year.

BA CEO Urges EU Tough Line On Plan To Bail Out Alitalia
27 April 2005

BRUSSELS (Dow Jones)--British Airways PLC (BAB) Chief Executive Rod Eddington Wednesday urged the European Union Commission to take a tough line on the Italian government's plan to rescue Alitalia SpA (AZA.MI), the struggling state-owned airline.

Speculation is mounting that the E.U. Commission will approve the rescue plan after E.U. Transport Commissioner Jacques Barrot last week said Deutsche Bank AG's (DB) intention to guarantee Alitalia's upcoming capital increase was "positive".

Alitalia's stock price jumped 2.8% on the news. The stock took off again Tuesday after the Italian press reported the E.U. Commission's transport department was satisfied the plan contains no state aid. A spokesman for the department said the reports were premature and a decision had yet to be taken.

Major competitors however are unconvinced that no state aid is involved. British Airways, together with Germany's Lufthansa AG (LHA.XE) and Air-France KLM (AKH), have sent letters to the E.U. complaining about the proposed bail-out arguing that competition will suffer as a result.

"It's vital that the new E.U. Commission applies the state aid rules to all airlines with the same rigor as it did after 9/11," Eddington said. After the terror attacks in the U.S., European airlines were refused large aid handouts from governments after passenger traffic fell sharply.

"The only way our industry will thrive is if the state doesn't intervene to prop-up failing carriers and allows the market to decide," Eddington said.

The E.U. Commission in January opened an in-depth probe into Rome's rescue plan to make sure the latest lifeline contains no illegal government aid. The scheme involves a EUR1.2 billion re-capitalization of Alitalia's flight division, AZ Fly, and the partial sale of its ground operations, AZ Services, to state-owned firm Fintecna. The state would also underwrite several million euros to cover the costs of layoffs.

E.U. Commission Transport Spokesman, Stefaan de Rynck, said the Commission could make a decision on Alitalia as early as the end of May.

Alitalia's turnaround plan calls for it to break even by 2006. The carrier recently estimated its 2004 losses were EUR850 million -nearly as large as its present market capitalization of EUR932 million. The company has posted an annual profit only four times in the past 16 years.

Emirates interested in link-up with Alitalia - Italy govt
03 May 2005

MILAN (AFX) - Emirates is interested in linking up with the troubled group Alitalia SpA, Italian deputy industry minister Adolfo Urso said.

Emirates 'is interested in studying a strategic alliance and the purchase of a stake' in Alitalia, Urso was quoted as saying by the daily La Stampa.

He added that it is still early days for any deal.

An alliance with Emirates would not jeopardise Alitalia's existing alliance with Air France-KLM.

The newspaper said that the Italian government is divided on whether to focus on the tie-up with Air France-KLM or seek an alternative.

Prime minister Silvio Berlusconi is pushing for an integration with the French airline, while the National Alliance -- the party of deputy prime minister and foreign minister Gianfranco Fini -- is open to alternatives.

Previously, Air France-KLM chief executive Jean-Cyril Spinetta said the group will not participate in the planned 1.2 bln eur capital increase for Alitalia, in which Air France-KLM owns a stake of about 2 pct.

He repeated that he will be ready to discuss an inclusion of Alitalia within the Air France-KLM group once the airline has been privatised by the Italian government and upon evidence that its efforts to return to profitability are working.

Alitalia FY 2004 Net Loss Widens To EUR812M From EUR520M
27 May 2005

ROME (Dow Jones)--Italy's struggling flagship carrier Alitalia SpA (AZA.MI) said late Thursday its net loss widened to EUR812 million last year from EUR520 million in 2003.

The state-controlled airline predicted 2005 earnings would be better than last year, but still not enough for the company to break even.

The European Union is expected to rule on whether Alitalia's rescue plan, which spins off the airline's core flight unit and includes layoffs, can go ahead to help stave off the company's bankruptcy.

- By Luca Di Leo, Dow Jones Newswires; +39 06 6782543; luca.dileo@dowjones.com

Corrected May 27, 2005 11:31 ET (15:31 GMT) [ 27-05-05 0827GMT ]

The European Union is expected to rule on Alitalia's rescue plan.

EU Set To Approve Alitalia Restructuring Plan Tues-Source
3 June 2005

BRUSSELS (Dow Jones)--The European Commission is poised to approve struggling Italian state-owned airline Alitalia SpA's (AZA.MI) restructuring plan Tuesday, a person close the case said Friday.

The Commission will conclude that the EUR1.2 billion restructuring plan "contains no state aid," the person said. Without it, the airline would face bankruptcy.

The approval comes at a sensitive time, not only for the airline but for Rome's relations with Brussels. Also on Tuesday, the Commission plans to launch an "excessive deficit" procedure against the country, saying its public deficits break E.U. rules and are worsening. The Commission will also ask Italy to make spending cuts.

The Commission in January opened an in-depth probe into the scheme, which involves a EUR1.2 billion recapitalization of Alitalia's flight division, AZ Fly, and the partial sale of its ground operations, AZ Services, to state-owned firm Fintecna. The state also intends to underwrite several million euros to cover the costs of layoffs.

The Alitalia bailout will come with conditions. In April, Deutsche Bank AG (DB) wrote a letter of intent agreeing to guarantee the capital increase. For regulators, this move was crucial, since it showed that the private sector thought the recapitalization would produce a viable airline. The bank will be required to formalize this agreement.

"We need a formal written guarantee from Deutsche Bank," the person said.

Another condition is that public and private investors receive the same conditions in the recapitalization. In addition, restrictions will be put on Fintecna, which is to take a stake in the spun-off ground service unit. If it sells the unit at a profit later, it mustn't pump the majority of the proceeds back into the fly unit.

European Commission spokesman Stefaan De Rynck said that the case will be on the Commission's agenda Tuesday.

Other European airlines have lobbied hard against the bailout. Under E.U. rules, governments can only save failing carriers once. Alitalia already received state aid in 1997 but the money did little to improve its results. The airline reported a net loss of EUR517 million for 2003 and has posted an annual profit only four times in the past 16 years.

I hope things will go smooth, at least in order to allow room for an AFR-KLM merger. Let's hope the government works towards lowering its shares value in the company and starts a privatizing process.

Would AFR in that case be interested in buying shares?

How would an AFR-KLM merger influence Alitalia's market at international level?

Any clue about who may be a probable domestic company they can to partner with?

Is Alitalia (in the future) going to invest in more efficient planes for the domestic/regional market?

I really love the airline and I hope they overcome they troubles one way or another. :cheers:

There seems to be a wave of privatization in the region lately. Greece and Hungary have plans to sell stakes in their national carriers.

A merger between Air France, KLM, and Alitalia might raise antitrust issues, and further marginalize airlines that haven't paired up yet. Currently, the other large carriers in Europe include Lufthansa-SWISS, the SAS group, and British Airways. Iberia is probably watching all this closely and the Eastern European carriers may find themselves cornered in the long-haul market by these huge carriers and in the short-haul market by budget carriers.

There seems to be a wave of privatization in the region lately. Greece and Hungary have plans to sell stakes in their national carriers.

A merger between Air France, KLM, and Alitalia might raise antitrust issues, and further marginalize airlines that haven't paired up yet. Currently, the other large carriers in Europe include Lufthansa-SWISS, the SAS group, and British Airways. Iberia is probably watching all this closely and the Eastern European carriers may find themselves cornered in the long-haul market by these huge carriers and in the short-haul market by budget carriers.

Definitely agree. The EE long haul market is literally being destroyed by all this and LCC-s have experienced a big growth. If you take a look at Polish air traffic curve, you will see that LCC-s traffic has grown tremendously.

Say this merger happens...Would this trigger a chain reaction for other present companies merger/group/enlargment within the EU as a way to keep on track with new dynamics to be created?

How is the Italian domestic market doing? Is there any financial healthy company that can be handy to Alitalia's situation?

Italian budget carrier Volaire collapsed last year and several executives were arrested for fraud last month :

Italian Police Arrest Executives From Collapsed Airline
28 April 2005

ROME (AP)--Police have arrested three top executives for alleged fraud and other charges at collapsed Italian low-cost airline Volare Group, a prosecutor said Thursday.

Police arrested the group's founder and former chairman, Gino Zoccai, former chief executive Vincenzo Soddu and former board member Giuliano Martinelli on charges of fraudulent bankruptcy, false accounting and embezzlement, said Antonio Pizzi, a prosecutor in the northern Italian town of Busto Arsizio.

Another former top executive, Mauro Gambaro, was placed under house arrest on the same charges, he said.

Authorities are still investigating dozens of other people in the case, Pizzi said.

Defense lawyers couldn't immediately be reached for comment.

Volare Group, founded in 1998 by a group of investors from the northeastern Italy's Veneto region, ran flights to 20 European destinations with a fleet of 24 planes.

The group, which employed some 1,400 people, grounded all of its planes last year because of financial problems and shortly after declared itself insolvent.

According to the prosecutor, among the operations that brought the airline to its EUR500 million collapse were the high-cost rental of aircraft from satellite companies managed by relatives of Volare administrators and the sale at bargain prices of air tickets to tour operators run by friends of the group's managers.

Italian news agency ANSA said that in June Volare, which was placed under bankruptcy protection, will start operating 12 daily domestic flights from Milan's Linate airport to the southern cities of Naples, Bari, Brindisi and Catania at the cost of EUR40 each way.

ANSA said that 530,000 passengers who had their flights canceled during the company's collapse will be able to purchase new tickets with a 50% discount.

Definitely agree. The EE long haul market is literally being destroyed by all this and LCC-s have experienced a big growth. If you take a look at Polish air traffic curve, you will see that LCC-s traffic has grown tremendously.

Say this merger happens...Would this trigger a chain reaction for other present companies merger/group/enlargment within the EU as a way to keep on track with new dynamics to be created?

How is the Italian domestic market doing? Is there any financial healthy company that can be handy to Alitalia's situation?as hkskyline pointed out, the italian domestic market is -- at least financially -- in dire straits. the second largest carrier, Volare, went bankrupt last year. a couple more carriers are experiencing a serious crisis, so much that RyanAir has started operating domestic flights. the sitaution is a bit ironic, considering that Italy has all the ingredients to make the most important domestic market in the EU: a long, boot-shaped peninsula with two major islands and a mountain chain running through the country from north to south, which make train and car connections quite difficult. on top of that, millions of immigrants from the south who settled throughout the years in the industrial north make the demand of national flights quite significant. finally, the nation's capital and the main industrial, commercial and financial hub are over 500 km apart. but the flag carrier has been handled for decades as a political toy, without the slightest interest for the actual industrial and financial state of the company.
one example is quite instructive. in the early 90's, Alitalia CEO Cempedella tried to restructure the company by rationalizing the personnel and improving its finances. but when the Italian gov't decided to gradually privatize the Post Service, some 5/6'000 employees where transferred from the Post to Alitalia...and this is but one example.
the only real solution for the problem is to let Alitalia go bankrupt, and then let a strong partner come in and build a real industrial plan. with AF/KLM Alitalia would become a regional carrier, and Rome and Milan regional hubs feeding CDG and Schipol. so a better solution would be an extra-EU carrier, such as Emirates, which would be more interested in keeping a strong hub within European soil.
and there is no doubt that Rome will be left out. 70% of all the tickets, and something like 90% of business class tickets, are sold in the north, and Malpensa has a catchment area of 16 million. plus all financial and commercial transactions are based there. only tourism sustains Rome's Fiumicino airport. but that alone is not enough.

EU OKs Alitalia Restructuring Plan With Conditions
7 June 2005

BRUSSELS (Dow Jones)--The European Commission Tuesday approved Italy's plan to restructure Alitalia SpA (AZA.MI), the struggling state-owned airline, after concluding that it "doesn't contain any state aid."

But, in exchange for granting approval, E.U. regulators are imposing "strict conditions" to ensure that the state's involvement is conducted under market conditions, according to E.U. Transport Commissioner Jacques Barrot.

"We will take scrupulous care" to ensure that Italy pumps in no illegal aid, Barrot said.

The approval is a major boost to Alitalia, which would have almost certainly faced bankruptcy if the plan was vetoed.

The scheme involves a minority participation by the state in a EUR1.2 billion re-capitalization of Alitalia's flight division, AZ Fly, and the partial sale of its ground operations, AZ Services, to state-owned firm Fintecna. The state will also underwrite several million euros to cover the costs of layoffs.

The decision comes at a sensitive time, not only for the airline but for the Italian government's relations with the E.U. Commission as a whole. Later Tuesday, the Commission is expected to launch an excessive deficit procedure against Italy, saying its public deficits break E.U. rules and are worsening. The Commission is likely also to ask Italy to make spending cuts.

The Alitalia rescue comes with conditions. In April, Deutsche Bank AG (DB) wrote a letter of intent agreeing to guarantee the capital increase. For regulators, this move was crucial, since it showed that the private sector thought the recapitalization would produce a viable airline. The bank will be required to formalize this agreement. Another condition is that public and private investors receive the same conditions in the recapitalization.

Fintecna's plans to take a stake in the spun-off ground service unit through a planned EUR216 million re-capitalization will create returns consistent with what a private investor would expect.

In addition, Alitalia must repay an E.U.-approved bridging loan worth EUR400 million by December 31, 2005, at the latest, the Commission said, adding that Italy already had given it assurances that the loan would be repaid earlier, as soon as the recapitalization of AZ Fly has taken place.

Other European airlines, including British Airways PLC (BAB) and Germany's Lufthansa AG (LHA.XE), have lobbied hard against the bailout. They allege Alitalia has been using some of the government handouts to pursue "commercially suicidal" business practices to their detriment, including opening new routes and slashing ticket prices.

But the Commission said it had found no evidence to support these claims.

Under E.U. rules, governments can only save failing carriers once. Alitalia already has benefited from an EUR1.4 billion government-backed restructuring in 1997 and an EUR1.4 billion capital injection two years ago but the money did little to improve its results. The airline reported a net loss of EUR517 million for 2003 and has posted an annual profit only four times in the past 16 years.

Alitalia to propose 30:1 reverse share split
By Phil Stewart

ROME, June 27 (Reuters) - Italian airline Alitalia said on Monday it would propose a reverse split of its stock to shareholders and lengthening the maturity of its 2002-07 bond.

Loss-making Alitalia made the announcements ahead of a planned capital increase later this year of up to 1.2 billion euros ($1.46 billion), meant to fund a restructuring that envisions a company profit as early as 2006.

Alitalia said it planned to eliminate the so-called nominal value of its shares and, clearing the slates ahead of the capital increase, confirmed plans to write down accumulated losses through March 31 2005 against the company's value.

The airline said it would propose to shareholders swapping 30 existing shares for 1 new share.

"This operation, which will reduce the number of shares ... will favour liquidity and trading on the stock market, making the value of a single share of stock more legible, benefiting current and prospective investors," the company said in a statement.

The board of directors also proposed restructuring Alitalia's 2002-2007 convertible bond <IT333188=CSBL> carrying a 2.9 percent coupon.

It said it aimed to extend the maturity of the bond by three years to 2010, while increasing the coupon to 7.5 percent.

Alitalia said the bond restructuring proposal was made in light of data provided by financial adviser Deutsche Bank.

Alitalia said its net financial position, which measures indebtedness, narrowed to 1.791 billion euros by May 31 from 1.829 billion at the end of April.

Earlier on Monday, Alitalia shareholders approved tapping its various capital reserves to partly cover its revised 2004 loss of 810.4 million euros ($979.2 million).

Shareholders approved using 235.3 million euros from its reserves to partly cover the loss, which was revised down from the 812 million euros, which Alitalia reported last month.

Alitalia Flight Attendants To Strike July 18 -Officials
28 June 2005

ROME (AP)--Flight attendants at Italian state carrier Alitalia S.P.A (AZA.MI) called a daylong strike for July 18, threatening to ground scores of flights, union officials said Tuesday.

Cabin crews have walked off several times in recent months over concerns that include contract provisions and a restructuring plan at the airline. In April, a four-hour strike staged by flight attendants forced Alitalia to cancel 168 flights.

Separately, some of Italy's main transport union groups called a 24-hour mass transit strike for July 15 to protest sick leave reform.

the alitalia strikes hardly make any news anymore :bash:

Alitalia cancels 92 flights because of airport ground handler strike
7 July 2005

MILAN (AFX) - Alitalia SpA cancelled 92 flights because of a strike by airport ground handlers between 12.30pm and 4.30 pm, airline officials said.

The cancelled flights comprise 46 on domestic routes, and 46 on international trips, they said.

The workers are in dispute with airport companies, not Alitalia, they said.

Whereas Air France is undoubtedly Paris-based, and Lufthansa's home is Frankfurt, Alitalia has a split personality, with hubs in both Milan and Rome.

Lufthansa operates from three hubs, Frankfurt, Munich and Zurich (due to the merger with Swiss).

Alitalia sees H1 pretax, pre-ex loss 120 mln eur vs 329 mln yr ago
07.07.2005, 02:50 AM

MILAN (AFX) - Alitalia SpA said that losses before tax and extraordinary items narrowed to an estimated 120 mln eur in the first half from 329 mln a year earlier.

Revenues from passenger traffic rose to an estimated 1.735 bln eur in the first half from 1.509 bln a year earlier, the company said in a statement released late yesterday.

The statement clarifies comments made yesterday by Alitalia chairman and chief executive Giancarlo Cimoli, who said that first half losses were about 200 mln eur lower than the previous year and 80 mln eur ahead of budget.

Cimoli also said that first half passenger revenues were in line with budget.

pw/cml

Alitalia Is Forced to Cancel Flights
19 July 2005
The Wall Street Journal

ROME -- Italian airline Alitalia was forced to cancel about 80 flights yesterday because of a 24-hour strike by a flight attendants' union, a company spokesman said.

Alitalia had announced that 59 flights -- 26 national and 33 international -- would be canceled due to the strike.

The union called the stoppage to protest Alitalia's move to cut the number of cabin staff and its use of short-term contracts.

Alitalia Hldrs Approve EUR1.2B Rights Issue By End 05
31 July 2005

MILAN (Dow Jones)--Alitalia SpA (AZA.MI) shareholders late Friday approved a rights issue of up to EUR1.2 billion to shore up the troubled flagship airline.

Shareholders gave the carrier's board a mandate to hold a capital increase by the end of 2005.

Unprofitable Alitalia, which has lost EUR1.33 billion in the past two years. also wrote down the equity on its balance sheet to EUR291 million from EUR1.4 billion to cover past losses.

Shareholders of Alitalia, which is 62% owned by the Italian government, also agreed to abolish the face value of their shares, allowing them to sell new stock more easily. They also approved a 30-to-1 reverse split, to be executed in September, aimed at facilitating future trading.

Shares in Alitalia, which has a market capitalization of EUR940 million, Friday closed down 1.6% at EUR0.24.

In the past three months, they have oscillated as much as 22% in value but that translated into only EUR0.05 in change to the stock price.

Alitalia said earlier this month that Banca Intesa SpA (BIN.MI) will subscribe to a part of any capital increase. Attracting investors is essential as European Union regulators have insisted that the Italian state reduce its stake to below 50%.

The carrier also said it generated some cash in June, cutting its net debt at the end of that month to EUR1.75 billion from EUR1.79 billion at the end of May.

Bondholders also met Friday to approve a previously announced change to an outstanding convertible bond due in 2010, raising its coupon yield to 7.5% from 2.9% and extending it to July 2010 from July 2007.

Alitalia specified that most of its existing bank debt is backed by guarantees such as liens on its aircraft or assurances from state export credit agencies. A EUR400 million bridge loan from Dresdner Kleinwort Wasserstein is also guaranteed by Italy's Economy Ministry, the company said.

no more strikes from AZ this week right?
someone knows where i could find information on them?

^ You can do a scan of any international news site and search for Alitalia.

Alitalia flight attendants union calls Aug. 30-31 strike
11 August 2005

ROME (AP) - A union for Alitalia flight attendants on Thursday called for a strike Aug. 30-31, raising the prospect of travel difficulties for Italians and tourists just as they head home from summer vacations.

The SULT union says it is protesting Alitalia's suspension of such arrangements as direct deduction of union dues from paychecks.

Alitalia claims it does not have to honor such arrangements because the union isn't acting in good faith during contract-renewal efforts.

Alitalia has been forced to cancel dozens of flights in recent weeks due to a string of strikes by flight attendants over contract disputes.

Alitalia says strike woes won't hurt turnaround

ROME, Aug 23 (Reuters) - Alitalia , facing a threatened peak-season strike next week by cabin crews, is confident that labour unrest will not hamper a turnaround plan at Italy's flag airline, Labour Minister Roberto Maroni said on Tuesday.

Maroni made the comments following a meeting with Alitalia's Chief Executive Officer Giancarlo Cimoli at which the two discussed a planned Aug. 30 to 31 strike by flight attendants in the SULT union, which is arguing for better contracts.

Alitalia is refusing to negotiate with SULT, and earlier this month deepened the standoff by refusing to further recognise the union formally -- an action questioned by Maroni.

"Cimoli did not appear worried about the harshness of the standoff and said that there will not be any big repercussions to the industrial plan," Maroni said.

"My impression is that Alitalia will not back down from its position."

Unlike Italy's biggest unions, the SULT did not sign off on Alitalia's turnaround plan last year.

The SULT confirmed again on Monday that it too would not back down from its strike, despite warnings of sanctions for breaking rules about industrial action during the July 27 to Sept. 5 peak season summer holidays.

Alitalia has already had to cancel hundreds of flights this year due to SULT union protests.

Good luck,Alitalia!

Report: Alitalia Considers Extra Layoffs
30 August 2005

ROME (AP) - Struggling Italian airline Alitalia might be forced to lay off an extra 2,000 people as part of its turnaround plan because of soaring oil prices, Italy's top financial daily reported Tuesday.

Alitalia said it had no comment on the report in Il Sole 24 Ore, which did not cite any sources.

The additional 2,000 layoffs would be in addition to the 3,700 layoffs among pilots, ground workers and flight attendants that state-run Alitalia has negotiated so far with unions.

Alitalia, which has not given recent figures on the impact of high oil prices, is trying to emerge from a deep financial crisis.

According to Italian news reports, higher fuel prices will cost the airline an additional 300 million to 400 million euros ($369 million to $492 million) between 2005 and 2008, the period covered by the turnaround plan.

The turnaround plan, approved late last year, allows for the separation of the airline's ground-service operations, to be called AZ Service, from its flight business, to be AZ Fly. The move, Alitalia hopes, will make it easier to get fresh new funds from private investors for the flight company, and should eventually lead to privatization.

Alitalia Flight Attendants Push Ahead With Sep 6-7 Strike
05 September 2005

ROME (AP)-A union that represents flight attendants for Italian airline Alitalia SpA (AZA.MI) said Monday it would go ahead with a strike planned for this week despite a government ban on the walkout.

The two-day strike is scheduled to begin 00:01 a.m. (2201 GMT) Tuesday and end at 11:59 p.m. (2159 GMT) Wednesday, the Sult union said.

Friday the transport ministry ordered the strike be postponed, threatening sanctions against workers who take part in the protest.

Alitalia has not canceled any flights ahead of the walkout, but the protest is expected to cause severe disruption to air travel throughout the country.

In recent months the carrier has been forced to scrub dozens of flights due to a string of strikes by flight attendants over contract disputes.

The walkout by Sult was originally set for Aug. 30-31, but was put off by a week because Italian law prohibits transport strikes during the heavy travel weeks of August.

"We will not accept the ministry's order, as we had already accepted the invitation to delay the strike," said Sult official Andrea Cavola. "We take full responsibility for this action."

Alitalia has been dogged by labor disputes as it tries to restructure and turn its business fortunes around.

Italy's flagship airline has refused to recognize Sult as a party in negotiations, contending it has not adhered to agreements. The union denies the accusations.

Alitalia cancels 24 flights on 2nd day of strike

ROME, Sept 7 (Reuters) - Italian airline Alitalia said on Wednesday it had cancelled another 24 flights on the second and last day of a strike by cabin crews with the SULT union, locked in a contract dispute.

The cancellations come on top of the 28 flights that Alitalia said it scrapped on Tuesday.

The SULT union accused Alitalia of low-balling the figures. By the union's count, there were 39 cancellations on Wednesday and at least 50 on Tuesday.

Either way, the strike was far less damaging than previous industrial action by unions this year.

Alitalia has refused to negotiate with SULT and has said the labour unrest will not hamper a turnaround plan meant to stem gaping losses that exceeded 800 million euros ($998.6 million) last year.

This is precisely why I used IBeria, and not Alitalia, to fly to Italy. :(

Alitalia says Q2 in profit, oil costs to rise

ROME, Sept 13 (Reuters) - Alitalia saw a small profit in the second quarter, reversing a trend of losses, according a breakdown of first-half results in a report on the period published on the airline's website.

"Operations were in line with or in some aspects better than guidelines set out in the industrial plan for the first half of 2005, making it possible to see a moderate profit for the second quarter," the report said.

But Alitalia added that the impact of high oil prices would be greater in the second half than in the first, when the net cost was 86 million euros.

Alitalia reported a first-half net loss of 122 million euros on Monday, reduced from losses of 620 million a year ago, on revenues of 2.1 billion euros from 1.9 billion in the first half of 2004.

Italy to Prop Up Airline Industry To Help Alitalia
By Luca Di Leo
Dow Jones Newswires
6 October 2005

ROME -- The Italian government said it approved an emergency decree providing benefits to the airline industry in a bid to help state-controlled carrier Alitalia SpA.

However, the Economy Ministry, which owns 62% of the unprofitable airline, raised objections at a cabinet meeting on how the move will be funded.

Deputy Transport Minister Mario Tassone said that Alitalia will be entitled to about 30% of the 120 million euros ($143 million) foreseen in the decree, which is expected to include special tax breaks for airlines.

The Italian government can't provide funds to Alitalia directly without violating European Union rules on state aid. But it can help the airline industry as a whole.

Plagued by political interference and high labor costs, Alitalia has booked a profit in four of the last 16 years. The carrier, which has a market capitalization of 930 million euros, last year posted a 810 million euro net loss.

Officials from the Economy Ministry earlier yesterday met with representatives from Banca Intesa SpA and Deutsche Bank AG, the two banks which are expected to back a 1.2 billion euros capital increase for Alitalia this year.

"It was a very friendly meeting. Alitalia should provide an updated version of its [rescue] plan next week," said a person familiar with the meeting.

Largely thanks to an EU-approved rescue plan last year, which cut jobs and spun off Alitalia's flight unit from its less profitable ground-services business, Alitalia managed to narrow its first-half 2005 loss to 122 million euros from 620 million euros.

But as with other airlines, the sharp rise in oil prices has kept Alitalia under pressure, making it difficult to find a deal on the carrier's recapitalization.

Banca Intesa had so far been reluctant to back the capital increase because it wants Alitalia to update its plan following the oil-price increase.

Friday October 7, 7:28 PM
Alitalia Cancels 138 Flights Before Strike

Italy's state airline Alitalia canceled 138 flights ahead of a planned four-hour protest Saturday by cabin crews, the carrier said.

Flight attendants are expected to walk off their jobs between 12 p.m. and 4 p.m. Rome time on Saturday, forcing the airline to cancel 74 international and 64 domestic flights, Alitalia said in a statement.

Unions called the strike because they claim Alitalia is not respecting parts of a recent contract deal it signed with flight attendants, said Giorgio Conti, an official at the Fit-Cisl union. One of the issues is the airline's decision to remove cots for flight attendants on long-range flights, he said.

Other unions are also preparing to stage a 48-hour nationwide transport strike on Sunday, threatening to idle trains, buses and planes across the country.

Alitalia says it has tweaked rescue plan as fuel prices soar
14 October 2005

ROME (AP) - Alitalia said Friday its board has approved an updated rescue plan to combat a 40 percent surge in fuel prices since April.

The unprofitable Italian flagship airline also said it was studying the feasibility of a euro485 million (US$582 million) loan from an unidentified U.S. bank that would use Alitalia airplanes as collateral.

Alitalia disclosed few details of changes to the 2005-2008 plan, which was originally approved last year and then updated in April. It said the new measures -- including re-negotiated procurement contracts and possible alterations to its flight network -- are aimed at maintaining the original targets in the wake of higher oil prices.

Alitalia said it expected that oil prices at US$60 a barrel will lead to euro320 million (US$383.97 million) of additional costs for 2006. Oil was trading at about US$62 a barrel Friday.

Labor Minister Roberto Maroni said he was "sincerely disconcerted" by Alitalia's decision to possibly back the loan from the U.S. bank with its airplanes, according to the ANSA news agency.

"A company that sells off the family jewels frankly seems in very bad shape," Maroni was quoted as saying by the ANSA and Apcom news agencies. He reportedly said he would talk to Premier Silvio Berlusconi and Economy Minister Roberto Maroni to "ask them if they were aware of this and if we can intervene in some way."

Alitalia has been losing money for all but four of the past 16 years.

The airline, majority-owned by the Italian government, is trying to raise euro1.2 billion (US$1.44 billion) in new equity, but its main banks, Deutsche Bank and Banca Intesa SpA, have yet to agree to underwrite the capital increase.

Recapitalization is widely considered crucial to the airline's survival, and banks want to be convinced Alitalia's four-year restructuring plan has a good chance of succeeding before agreeing to any deal.

The recapitalization aims to cut the Italian Treasury's stake in the airline to below 50 percent from 62 percent, in line with European Union requirements.

Earlier this week, Alitalia and unions reached an agreement on improving productivity that could reap up to euro65 million (US$78 million) in savings starting in 2006.

Banks to back Alitalia cap increase Friday -source

ROME, Oct 27 (Reuters) - The banks that will guarantee the capital increase this year for Italy's national carrier Alitalia will meet on Friday to form a consortium and finalise the accord, an industrial source told Reuters on Thursday.

The banks, led by Deutsche Bank , are expected to include Italy's foremost lenders such as Banca Intesa , UniCredito and Sanpaolo IMI .

"By the end of tomorrow the consortium will be formed for the capital increase," the source told Reuters.

On Friday the Treasury's privatisation committee will also meet to give the go-ahead to the capital increase of up to 1.2 billion euros ($1.46 billion) for the state-controlled airline planned by the end of the year.

Alitalia's board approved a new industrial plan this month and the struggling airline said it had reached a deal with trade unions to allow savings of 65 million euros per year from 2006 by boosting productivity, improving management and "optimising working models."

Alitalia's auditor won't approve first-half results
By Jennifer Clark
Dow Jones Newswires
2 November 2005

MILAN -- Alitalia admitted that its accountants weren't able to sign off on the cash-strapped airline's first-half results amid delays in a 1.2 billion euros ($1.4 billion) capital increase, underlining yet again how close the airline is to a shutdown.

Auditor Deloitte & Touche said it couldn't approve Alitalia's accounts until it had further information about the planned capital increase, the airline said.

Deloitte said in a five-page memo that the capital increase was essential to the airline's turnaround plan, and it noted that "even though preparations for an underwriting consortium are under way, the deadline for the capital increase is drawing near and at this point we have no evidence" that an agreement has been reached.

An Alitalia spokesman said yesterday that the airline was in talks with banks to reach an agreement to underwrite the capital increase, and referred all further questions to the banks themselves. The spokesman said Alitalia's board will review its third-quarter accounts on Monday.

Alitalia is racing against the clock to convince Deutsche Bank AG and others to back a planned 1.2 billion euros capital increase slated for mid-November. Deutsche Bank wasn't available for comment. The capital increase must be completed by the end of the year or the European Union will open a probe into whether the struggling carrier is receiving improper state aid.

The airline's stock fell 3.4% to 6.03 euros, underperforming the broader market. But analysts said the stock is being underpinned by speculation that the government will never let the airline collapse.

The capital increase was supposed to take place in October, but the Italian Treasury, which owns 62% of the airline, still hasn't reached an agreement with the two banks -- Banca Intesa SpA and Deutsche Bank -- that were expected to back the deal, people familiar with the situation said last month.

Alitalia auditors waiting for cap hike OK -source
By Phil Stewart

ROME, Nov 3 (Reuters) - Auditors at Deloitte & Touche who declined to sign off on Alitalia's first-half results are waiting for banks to back a capital increase at the airline before revisiting their decision, a financial source said.

The source, who declined to be named, told Reuters that the first-half results themselves were not the reason the auditors refused to give their approval to Alitalia's books.

Instead, the source said, the problem related to Alitalia's ability to finance its ongoing restructuring and keep flying, which hinged on the planned share issue to raise up to 1.2 billion euros ($1.4 billion).

A formal guarantee from the banks, assuring the capital hike goes ahead, would probably resolve the problem, the source said.

Deloitte & Touche said on Monday Alitalia's first-half results "confirmed the company's critical economic, financial and equity situation", and declined to sign off on its balance.

"From a technical point of view, reading the auditor's report, the uncertainty is over the corporate continuity, not over its accounts," the source said.

"Everything depends on the capital increase ... With the capital increase there is continuity."

Banca Intesa , one of the banks which may participate in the capital increase, said on Thursday it did not see Deloitte's decision as a roadblock.

"It is not an irresolvable obstacle, also because it is linked to the recapitalisation," Intesa Chief Executive Corrado Passera said. "We're working well, but nothing can be said before things are concluded."

Alitalia lost 120 million euros in the first half of 2005 before taxes and extraordinary items, compared with a 329 million euro loss in the January-June period last year. It lost more than 800 million euros in the whole of 2004.

DEBT-EQUITY

Alitalia in July reduced shareholders' capital to 291 million euros from 1.43 billion in order to account for accumulated losses through March 31, 2005. Alitalia's net debt stood at 1.709 billion euros in September.

The share issue goes to the heart of Alitalia's 2005-2008 rescue plan by helping restore order to the accounts and providing sorely needed capital to pay for a broad restructuring, which includes a spin-off of ground services.

"It depends on the banks that need to undersign the contract guaranteeing (the capital increase). That will therefore oblige them to buy the outstanding shares" not acquired by the market, the source said.

The window of opportunity for the share issue is closing.

Deutsche Bank included a Nov. 14 deadline to start negotiating the rights offer that will precede the capital increase. The deadline was included in the bank's April memorandum of understanding with Alitalia, in which it offered to back the share issue.

It is still waiting for at least one other bank, expected to be Banca Intesa, to join the deal. Intesa has conditioned its support on a revised rescue plan that takes into account higher-than-expected fuel prices, which Alitalia says will cost it an additional 320 million euros next year alone.

In response, Alitalia has scrambled to secure cost-cutting deals with unions, a government aide package and a $485 million loan that uses its planes as guarantees.

"At this moment, lacking a consortium of guarantors, the essential element is missing that would enable (Deloitte) to say that the market has evaluated Alitalia's plan," the source said.

Although Deutsche Bank could extend its Nov. 14 deadline, Alitalia lacks much wiggle room.

The European Union has called for the capital increase and privatisation to be carried out in 2005. It was a precondition for its approval of a 400 million euro emergency loan, guaranteed by the Italian state and drawn down by the airline.

Friday November 4, 12:52 PM
Alitalia board meets Monday to discuss capital increase

MILAN (AFP) - Italian airline Alitalia said its board would discuss a capital increase of up to 1.2 billion euros (1.44 billion dollars) when it meets on Monday.

Finance director Gabriele Spazzadeschi said earlier this week that he was confident that the group would finalise an underwriting consortium to finance the increase, despite the refusal of external auditor Deloitte Touche to certify its first half accounts.

Deloitte Touche said it wanted to obtain guarantees that the troubled airline would survive.

Alitalia plans to launch its recapitalisation by the end of the year.

In the first half, the airline posted a net loss of 122.1 million euro.

Alitalia sees bank deal signed by Nov 11-minister
MILAN, Nov 7 (Reuters) - Alitalia expects banks to sign an agreement by Nov. 11 formally committing them to a consortium backing the airline's capital increase, Transport Minister Pietro Lunardi said on Monday.

He said the timetable was provided by Alitalia CEO Giancarlo Cimoli. Alitalia's board of directors meet on Monday to discuss the upcoming share offer, worth up to 1.2 billion euros ($1.42 billion).

"Cimoli informed me that by Nov. 11 the banks would decide on underwriting" the capital increase, Lunardi said.

All Italia is deep S**t, they should either downsize and start from low base or go broke and hope this helps company to restructure...

All Italia is deep S**t, they should either downsize and start from low base or go broke and hope this helps company to restructure

Alitalia could do what you said if there weren't other airlines such as LUFTHANSA (with Air one) operating domestic flights! And this would be the first step to save the italian national airlines

Alitalia could do what you said if there weren't other airlines such as LUFTHANSA (with Air one) operating domestic flights! And this would be the first step to save the italian national airlinesBut why shoould Alitalia be protected from competition? BA makes massive profits despite having to compete with Ryanair, EasyJet, BMI etc on domestic and short haul routes and facing more intense competition on long haul routes than any other airline in the world (think Virgin Atlantic, Emirates, etc - all three major airline alliances have hubs at Heathrow). Alitalia is failing because it's 65% owned and run by the government and they just don't take commerical decisons.

Alitalia may buy domestic airline Volare 'if the price is fair' - Cimoli
13 November 2005

MILAN (AFX) - Alitalia SpA may buy smaller domestic airline Volare 'if the price is fair', Alitalia's chairman Giancarlo Cimoli said without elaborating in a interview with Corriere della Sera today.

Cimoli's comments come after the airline cleared a 1 bln eur capital hike on Friday, allowing the company to continue running its operations.

Volare, which is under administration, has also attracted interest also from Virgin group's low cost airline Virgin Express, reports said earlier this year.

Alitalia presents interest in Volare -source

ROME, Nov 21 (Reuters) - Italy's largest airline Alitalia has presented an expression of interest in buying Volare, a smaller airline in extraordinary administration, a legal source said on Monday.

"Alitalia is among the 12 Italian companies that have presented expressions of interest for Volare," the source said.

Analysts greeted the move with scepticism, given that Alitalia is in the process of issuing new shares to fend off its own collapse.

"This is an unnecessary complication in an already complicated equities story," said one London-based airline industry analyst, who asked not to be named.

Alitalia is issuing 1 billion euros ($1.2 billion) worth of new stock to help finance its 2005-2008 turnaround plan.

Its shares traded down 6.6 percent at 1.21 euros by 1630 GMT. The stock has fallen 29 percent in the past month, the biggest faller in the Milan all-share index <.MIBTEL>, Reuters data showed.

Besides Alitalia, the other companies that have expressed interest in Volare include smaller carriers Mediterranea, AirOne and BluPanorama, the legal source said.

Alitalia recorded a loss of more than 800 million euros last year. It has forecast a return to profit in 2006.

Volare collapsed under heavy losses and debt a year ago, leaving thousands of passengers stranded. Financial police arrested six former company executives earlier this year, accusing them of diverting funds to set up a new airline.

Volare is now under extraordinary administration, a form of creditor protection that allows day-to-day business to continue.

Alitalia Chief Executive Giancarlo Cimoli has repeatedly said he is interested in Volare but that a deal depends on the price.

Alitalia stock falls over 13 pct as doubts weigh
By Phil Stewart

ROME, Nov 22 (Reuters) - Shares in Alitalia fell more than 13 percent to a record low on Tuesday as it forges ahead with a 1.0 billion euro ($1.17 billion) capital increase that analysts doubt will resolve its problems.

Citigroup slashed its target price on the shares to 0.40 euros, compared with Alitalia's closing price of 1.05 euros on Tuesday.

In a note to clients, Citigroup reiterated its sell/speculative rating on the stock and expressed doubt over loss-making Alitalia's turnaround plan, including its call for profit next year.

Citigroup expected the share price to continue falling as the government cuts its stake in the state-controlled carrier to below half, creating liquidity allowing for short selling. "Alitalia's current valuation is artificially high due to the inability to sell short, resulting from the government's 60 percent stake," it said.

"As the government reduces its stake and free float increases, we would expect more short-selling activity."

Alitalia-watchers were also awaiting word on whether Air France , which owns 2 percent of Alitalia, will buy new shares in the Italian airline as it carries out the capital increase. Alitalia lost more than 800 million euros last year.

Air France declined comment on Tuesday.

"Nobody wants to have Alitalia shares in their portfolio," one trader said. "The institutional investors don't have it and the stock is strongly influenced by speculative moves."

Alitalia's 2005-2008 turnaround plan sees a fleet renewal and aims to take back its domestic market, which has been eroded by emergence of lower-cost rivals.

BUDGET AIRLINE RIVALS

"It also targets a 4 percent annual unit revenue increase on domestic routes, despite further inroads from low-fares carriers, in particular Ryanair," Citigroup said. "This view on short-haul routes is not one shared by other flag carriers in Europe." A piece in the puzzle may be its interest in Italy's Volare airline. A legal source said on Monday Alitalia was one of 12 companies which presented an expression of interest to buy Volare.

Even if Alitalia meets its targets, Citigroup raised concern over its capital requirements -- with an eye on Alitalia's ageing fleet. It estimated Alitalia would need to replace 70 MD80 aircraft between 2009 and 2015.

"This would require around $3.5 billion in capex requirements, potentially stretching the balance sheet again at the end of the current turnaround plan," it said.

Italian Treasury may cut Alitalia stake to under 30 percent in 2006, company says
24 November 2005

ROME (AP) - The Italian state may reduce its stake in Alitalia SpA below 30 percent next year, Alitalia's Chief Executive Giancarlo Cimoli said in comments published Thursday.

In an interview with financial daily Il Sole-24 Ore Cimoli said the reduction would be "the next step" following the troubled airline's bid to raise about �1 billion (US$1.2 billion) in a capital increase to stave off the company's bankruptcy.

Alitalia confirmed Cimoli's comments. The Economy Ministry said it could reduce its stake, but no timetable had been decided on.

The recapitalization aims to cut the Italian Treasury's stake in the airline from 62 percent to below 50 percent in line with European Union requirements.

"We needed to do this desperate and courageous operation" Cimoli was quoted as saying by the newspaper.

"Alitalia's capital increase has aroused the interest of analysts and funds, especially in London and the United States," he said.

Alitalia mauled over fears for future

MILAN, Nov 27 (AFP) - Prospects for struggling Italian airline Alitalia looked bleak as the price of shares in the company plummeted by 30 percent last week and analysts began to speculate that its best chance of survival would be a merger with Air France/KLM.

The company kicked off a one-billion-euro (1.17-billion-dollar) share issue earlier this month, which has sparked the share price collapse as investors question whether the recapitalisation will be sufficient to assure the future viability of the group.

Chief Executive of Alitalia, Giancarlo Cimoli, put on a brave face, insisting that the fall in the price of shares was "expected" -- not because of the capital increase but because recent results did not justify the price.

At the close of trading on Friday, shares showed a 0.79 percent gain to 0.986 euros, putting the fall over the week at about 30 percent.

Analysts at investment bank Citigroup said that the shares were worth no more than 0.40 euros.

They said in a note that another capital hike would be necessary as the company would have to invest to modernise its ageing fleet of aircraft, also warning that labour unrest would continue to deter travellers.

Alitalia, which was saved from bankruptcy by the Italian government last year, has started to implement a restructuring plan that includes job cuts, a split of the company into flight and ground-handling operations and the capital increase.

According to economists Marco Ponti and Giorgio Ragazzi, specialists in the transport sector, Alitalia faces an uphill battle.

"There are a lot of people who doubt that the company, with its generous conditions for staff and its lack of efficiency, can recover without ending up like Swissair or Sabena," they said.

Swissair went backrupt in 2002 and Belgium's Sabena succumbed to its financial difficulties in 2001.

They also said that the capital increase, which will end on December 2, comes at a good time for the centre-right government of Silvio Berlusconi.

"With the capital increase, the problem of Alitalia has been put back until after the elections", they said, referring to national elections due next year.

For Ponti and Ragazzi, Alitalia's financial problems are not because of technological shortcomings or a lack of capital, but because of missed investment opportunities, political interference and the militancy of the company's labour representatives.

In the last 10 years, the airline has reported eight years of losses.

A ray of hope for Alitalia appeared in the form of Air France/KLM, the world's biggest airline group after a merger last year of AirFrance and KLM of the Netherlands.

The merged group bought shares worth 20 million euros during the capital increase to maintain a stake of 2.0 percent in Alitalia

Alitalia chief Cimoli appeared to recognise last week that the best chance of survival for the company would be to join the expanding Air France/KLM group.

Air France/KLM said this week that net profit had increased to 717 million euros in the second quarter from 195 million in the same period last year.

"For the future, we need to look at an alliance. We cannot remain on our own," Cimoli said in an interview with newspaper Il Sole 24 Ore on Thursday, adding that he would meet the chief executive of Air France/KLM, Jean-Cyril Spinetta, in the next few weeks.

Alitalia signed a partnership agreement with Air France in July 2001 which led to both companies taking cross-holdings in each other and was meant to open the way to closer collaboration.

However, since the signing of this agreement, Air France has finalised its merger with Dutch rival KLM and has said that closer ties with Alitalia would be contingent on the privatisation of the company and proof the Italian group has turned round its strained finances.

Il Sole 24 Ore reported that Alitalia could face resistance from KLM to any future collaboration after the failure of a tie-up between Alitalia and KLM in 2000 which led to KLM paying 250 million euros in penalties.

Alitalia has said that it expects to turn a net profit next year after the implementation of its restructuring plan.

Its restructuring plan, launched in the third quarter of last year, foresees 3,700 job cuts, the sale of the ground-handling business to a public holding company and the billion-euro recapitalisation.

During the share issue, the state has let its holding fall to 49.9 percent from 62.3 percent. The state's holding should fall to 30 percent in 2006, according to Cimoli.

Alitalia Says 99.4% Rights Issue Subscribed
3 December 2005

MILAN (Dow Jones)--Alitalia SpA (AZA.MI) said Saturday its EUR1 billion capital increase has been 99.4% subscribed, according to preliminary results.

The rights issue, which ended Friday, is aimed at facilitating the privatization of the Italian carrier, deconsolidating the services division and bringing the flight activities, AZ Fly, into profit next year.

Alitalia said in the statement that the percentage of rights issues subscribed is in line with expectation.

The capital increase will dilute Italian state's stake to 49.9% from 62%.

Alitalia mandated Deutsche Bank (DB) as the lead manager for the capital increase of 1.26 billion new shares.

Alitalia takes $445 million loan from GE Corporate

ROME, Dec 15 (Reuters) - Alitalia said on Thursday it finalised a $445 million loan with GE Corporate Banking Europe S.A.S., a French subsidiary of General Electric Co. , as part of its fundamental restructuring plan.

The Italian airline said in a statement the loan would run for eight years and was backed by guarantees on 28 Alitalia aircraft.

The loan comes just two weeks after a 1 billion euro ($1.20 billion) capital increase, also part of the turnaround plan that is aimed at bringing the airline back to profit and under which the state will reduce its controlling stake.

The airline has immediate need for cash as, under European Union rules that ban state aid to airlines, it has to repay a state-guaranteed short-term bridging loan of 400 million euros.

Alitalia posted nine-month losses of 118.8 million euros, compared with a loss of 685.4 million euros in January- September 2004, when it factored in heavy restructuring costs.

The company forecasts a profit next year, but some analysts doubt this will be possible amid fears over high fuel prices, competition, labour strife and the cost of fleet renewal.

Alitalia pilots, flight attendants to strike at start of Turin Olympics
10 January 2006

ROME (AP) - Alitalia pilots and flight attendants plan to strike on the eve and the first day of the Turin Olympics next month, threatening havoc for arriving fans.

Cabin crews are set to strike for 24 hours on Feb. 10 -- the day of the opening ceremony -- and pilots are scheduled to stage a four-hour protest the day before.

Turin organizing committee spokesman Giuseppe Gattino said the situation was being "monitored," noting that strikes in Italy are often postponed or called off at the last minute.

Games government supervisor Mario Pescante said the government was looking into the situation.

Local Turin unions signed an "Olympic Truce" in November aimed at avoiding strikes before and during the Feb. 10-26 Winter Games. An agreement to suspend protests on a national level is still being discussed.

The 24-hour strike by flight attendants was originally scheduled for Nov. 28, but was postponed due to the proximity of another strike.

"It's a dispute that has been going on for a long time, and to postpone the strike we would need something really concrete from Alitalia," said Mauro Rossi, an official with transport union FILT-CGIL.

Rossi said the date was not timed to coincide with the Olympics, but was the result of the postponement. He added that it would be difficult to postpone the strike again because the Easter holidays begin shortly after the games, and strikes are banned during that period.

"The Olympics are important, but our dispute is also important," he said.

Workers contend Alitalia is not respecting parts of the contract it signed with unions, Rossi said.

In October, Alitalia canceled 138 flights before a four-hour protest by cabin crews.

The Feb. 9 pilot strike is set to last from 10 a.m. (0900GMT) to 2 p.m. (1300GMT), according to the Transport Ministry Web site.

That is going to blow up in their faces massively.

I doubt theyll actually do it, imo its just for publicity

Alitalia Strike Cancels Dozens Of Flights
19 January 2006

ROME (AP)--Employees at Italy's Alitalia SpA (AZA.MI) went on strike Thursday, forcing the state airline to cancel dozens of flights, although the two sides disagreed on exactly how many.

Labor unions called the strike to protest restructuring at the loss-making airline that has cut jobs and spun off the airline's flight unit from its less-profitable ground services business.

The company originally planned to cancel 74 flights on the day of the strike, but union officials told the ANSA news agency Thursday that Alitalia was forced to cancel more than 150 flights following a strong employee participation in the strike.

Alitalia disputed those numbers, saying the company decided earlier this week to cancel 74 flights, and on Wednesday decided to cancel 24 more because there weren't enough aircraft available to rotate, partly because of the strike.

On Thursday, the carrier canceled 11 more flights but said that was for technical or weather related reasons.

The Rome-based airline operates 190 aircraft and flies to 500 destinations in more than 100 countries.

Alitalia Workers Plan Second Walkout Within A Week
20 January 2006

ROME (AP)--Unions called a strike at Alitalia (AZA.MI)for Monday, the second 24-hour strike at the ailing carrier in less than a week, while the airline warned travelers that continuing labor unrest could force the cancellation or delay of 130 flights Saturday.

A one-day strike by state railway workers also loomed for next week, as labor unrest flared up after a holiday truce for Christmas and New Year's.

Some of the airline's workers picketed outside Rome's main airport Friday, reportedly causing delays and cancellations.

Italy's authority regulating strikes declared Monday's planned walkout illegal.

"Because of the continuing in the next days of illegal union actions" and despite the declaration of the strike's illegality, Alitalia said in a statement Friday night, Saturday's operations could see "delays and cancellations estimated at this moment to number 130."

Ground and flight crew from Alitalia would walk off the job Monday, following the breakdown of negotiations with the government, said Mauro Rossi, an official with Filt-Cgil transport union.

The latest job stoppage will likely force Alitalia to scrap many national and international flights, as it did Thursday, when employees struck for the day.

Workers are protesting restructuring plans at the loss-making airline, which have included cutting jobs and spinning off the airline's flight unit from its less profitable ground services business.

Some 500 demonstrators continued the protest early Friday, grouping outside a staff entrance of Rome's Leonardo da Vinci airport and triggering the cancellation of several flights, the news agency ANSA reported.

Alitalia said it could not immediately give information on flight cancellations from Friday's labor unrest.

The Italian news agency ANSA quoted union officials as saying they needed to strike now because walkouts will be forbidden by law during a truce period running between February and April to cover the Turin Winter Olympics, national elections on April 9 and the holiday stretch around Easter, April 16.

A train strike also loomed in Italy. State railways said train operators have called for a 24-hour strike starting from 9 p.m. (2000 GMT) Jan. 26. Train workers have staged several strikes in recent months to press for better safety on the rails and improved working conditions.

Alitalia scraps 66 flights, unions eye shutdown
By Valentina Consiglio

ROME, Jan 21 (Reuters) - Angry workers forced Italy's largest airline, Alitalia, to cancel at least 66 flights on Saturday and warned they were ready to ground the carrier over a turnaround-plan embraced by many investors.

The Italian government, which has a nearly 50 percent stake in the airline, called for a meeting next week with labour leaders threatening a 24-hour strike on Monday.

Unions already also forced Alitalia to cancel 74 flights on Thursday and at least five more on Friday.

Labour leaders were considering whether to scrap the formal Monday strike, due to the government's willingness to sit down with them on Wednesday. But irregular industrial unrest continued on Saturday, which could prove equally troublesome for the airline.

"From tonight, all of Alitalia's planes risk staying on the ground because the company does not have the personnel to make the technical checks indispensable to get them in the air," Filt Cgil union secretary Fabrizio Solari told Reuters.

Alitalia confirmed 66 cancellations in a statement late on Saturday and warned of more to come.

"Because of the illegitimate union initiatives during the previous days, there could be further delays and cancellations in the coming days ahead," it said.

Beyond contractual disputes, unions are worried about Alitalia's spin-off of ground services, which absorbed thousands of workers. Their futures appears increasingly decoupled from Alitalia's slimmed-down flying unit.

Labour leaders also fear the company's turnaround plan will fail to deliver promises, including profits in 2006.

The industrial action is putting considerable pressure on Alitalia's CEO Giancarlo Cimoli, the architect of the turnaround plan.

Italy's leading financial daily, Il Sole 24 Ore, reported on Saturday that Alitalia's turnover from passengers, including fuel surcharges, was around 147 million euros ($177.7 million) short of the budget by Dec. 15, 2005, at 3.575 billion euros.

The newspaper cited an internal document dated Dec. 16.

It also said the 2005 result pointed to an operating loss of around 200 million euros in 2006.

But analysts say Alitalia's turnaround plan holds promise. Deutsche Bank recommended buying the stock last week.

It pointed to Alitalia's forecast for a profit in 2006 and said its cost-cutting programme was about 80 percent complete, following job cuts and the spin-off of ground services.

Deutsche Bank also said Alitalia's plans to acquire low-cost airline Volare could be positive, thanks to its valuable slots out of Milan's Linate airport.

A decision on whether Alitalia's bid for Volare will be accepted could come as early as next week.

Italy PM Berlusconi Says Alitalia Privatization Difficult
23 January 2006

ROME (Dow Jones)--Italian Prime Minister Silvio Berlusconi Monday said the privatization of state-controlled flagship carrier Alitalia Spa (AZA.MI) was a difficult task.

"I don't think it is so easy to make such a decision," as the government has to take into account the country's pride in the airline, Berlusconi told a radio show when asked about Alitalia's privatization.

Asked why he didn't use a strong majority in parliament to push the privatization forward, the premier said there was a party in his ruling coalition which was against letting market forces prevail.

Alitalia is quoted on the Milan stock market, and a EUR1 billion capital increase launched last November reduced the Economy Ministry's ownership to 49.9% from over 60%. Nevertheless, Italy's government remains by far the biggest shareholder.

Berlusconi added that with fewer strikes, the company would be in better shape. Alitalia's workers continued wildcat protests on Monday, after a strike last Friday which continued into the weekend.

Protests at Italy's Alitalia continue; labor minister warns of airline's possible bankruptcy
By AIDAN LEWIS
Associated Press Writer
23 January 2006

ROME (AP) - Italy's Alitalia expected cancellations or delays for as many as 250 flights Monday as workers held wildcat protests, while the labor minister warned in an interview that the government will not bail out the troubled airline.

Though unions called off a 24-hour strike for Monday, Alitalia workers picketed at Rome's Leonardo Da Vinci airport, gathering round fires in the early morning cold.

Alitalia said in a statement that it was expecting the protests to trigger as many as 250 delays and cancellations. It said similar protests Sunday had forced the airline to scrap 121 flights.

Workers are protesting restructuring plans at the loss-making airline, which include cutting jobs and spinning off the airline's flight unit from its less profitable ground services business.

Amid speculation about the company's future Alitalia shares dropped sharply on the Milan stock exchange Monday, down 7.7 percent at euro1.05 (US$1.27) by early afternoon.

Roberto Maroni, labor minister in Premier Silvio Berlusconi's center-right government, told La Repubblica newspaper that the protests could lead Alitalia to bankruptcy.

"At the end of this route you go straight to the courthouse with the account books, you get to the bankruptcy of Alitalia," Maroni was quoted as saying.

Maroni said the European Union would not allow the government to bail out the airline, as it has done in the past. "Today, therefore, there's no more space to negotiate and to talk about money," he told the paper.

Maroni added bankruptcy could be positive for Alitalia in the long run, saying: "To allow a company that is in crisis to be reborn and to really compete on the market, you need to re-found it."

Some in the government hope the restructuring plan will eventually lead to privatization, though Berlusconi said on a radio show Monday that it had not been possible to privatize the airline so far because of differences within his coalition.

In a clear sign of that, Agriculture Minister Gianni Alemanno said in another interview, published Monday in Corriere della Sera, that letting Alitalia go bust would be "madness."

"Our country stakes a lot on tourism raising our GDP, and having a flagship airline is essential for this aim," said Alemanno, who belongs to the right-wing Alleanza Nazionale party that has traditionally supported companies owned or controlled by the state.

Alitalia negotiated a euro1 billion (US$1.2 billion) recapitalization last year to cut the state's stake to below 50 percent from 62.4 percent, in line with European Union requirements.

The airline said Monday that the government stake stands at 49.9 percent.

Wildcat stoppages were expected to continue ahead of a meeting planned for Wednesday between unions and government representatives.

Alitalia workers have been protesting since Thursday, causing travel chaos and hundreds of cancellations of national and international flights.

The Rome-based airline operates 190 aircraft and flies to 500 destinations in more than 100 countries.

Berlusconi says Alitalia restructuring must go on

ROME, Jan 24 (Reuters) - Alitalia must push ahead with a restructuring plan and face down wildcat strikers who have paralysed the airline over the past week, Italian Prime Minister Silvio Berlusconi said on Tuesday.

The premier played down talk by some of his ministers that they would not mind if Alitalia went bust, saying the flag carrier's existence was a matter of national pride -- comments that helped stem a share price plunge that started on Monday.

Alitalia warned customers that up to 250 flights would be cancelled or delayed during the day because of a protest by workers opposed to splitting off the airline's ground operations -- a core element of CEO Giancarlo Cimoli's restructuring plan.

"I don't think it's possible not to go ahead with the plan presented by Cimoli to international investors, not without reimbursing those investors with the capital they put in," Berlusconi told RAI radio.

The strike, which has forced Alitalia to cancel hundreds of flights over the past six days, comes weeks after the company raised 1 billion euros ($1.2 billion) from a do-or-die capital increase.

The prime minister hinted at sending in the military to break up the protest, which is not sanctioned by the main unions. "We may get to that point, but we will try to avoid it because we know tragedies could happen," he said.

"LIKE LEMMINGS"

The cabinet will meet unions on Wednesday but opinions vary within the government on what, if anything, the state can do.

European Union rules ban state aid to airlines and the restructure, in which the state reduced its stake to less than 50 percent, was meant to create a profitable airline that needed no hand-outs.

Labour Minister Roberto Maroni fuelled a 9 percent drop in Alitalia shares on Monday when he suggested it might be time to allow the airline -- which has been propped up by the state several times in the past -- to go bankrupt.

"I don't know what the unions will ask us for on Wednesday," he said. "My impression is that some people in Rome think Alitalia must survive and that the government has the duty to support it at all times and in all ways. This is not the case."

Berlusconi is walking a delicate political line ahead of a general election scheduled for April 9. As a professed economic liberal he backs the modernisation plan, but is also wary of any prolonged, bitter dispute in the run-up to the vote.

"We need to see in the coming days if we can get an answer which takes account of citizens' rights," he said. "It seems right that a country has pride in having its own airline."

The comments stemmed further losses to Alitalia's share price, which was down a further 3 percent at the open. At 1145 GMT the stock was trading up 2 percent at 1.064 euros.

The strikes have stranded thousands of passengers and will punch another hole in the airline's accounts and its reputation for reliability among customers.

"Like lemmings guided by their own instincts, the unions and workers at Alitalia are committing mass suicide," leading daily Corriere della Sera said in a front-page editorial.

Workers were wrong if they imagined government policy might change if the centre left won the election, the paper said, as a new administration would be keen to avoid appearing weak in the face of union pressure.

The strikers are concerned for the future of ground operations which, under Cimoli's plan, have been split off from the main flying part of the airline into a company called AZ Services, controlled by state-owned holding company Fintecna.

Alitalia's future in the balance as wildcat strikes continue
By AIDAN LEWIS
24 January 2006

ROME (AP) - A flurry of wildcat strikes have put the future of Alitalia back on the line, overshadowing the company's hard-fought efforts to restructure and the euro1 billion capital increase it managed to secure at the end of last year.

The walkout by ground workers protesting the restructuring plans have caused travel chaos, with hundreds of flights canceled over the past five days. A Cabinet minister has even raised the prospect of bankruptcy.

While analysts say there is no immediate risk of that, questions remain over Alitalia's long-term prospects.

"Sooner or later one needs to open one's eyes and recognize that the arrival of low cost companies has completely revolutionized air transport," Financial daily Il Sole-24 Ore said Tuesday.

Premier Silvio Berlusconi's government, which holds a 49.9 percent stake in Alitalia, has talked tough. With general elections looming, the government can ill-afford the collapse of the national carrier.

Berlusconi has threatened force to stop the protests, saying they "do not take into account the needs of the citizens." Labor Minister Roberto Maroni said the protests set Alitalia on the road to bankruptcy and warned that the government cannot bail the company out.

"The longer Alitalia stays at a standstill, the more it loses market share, customers," Maroni said in an interview with online paper Affaritaliani.it.

Alitalia, long cash-strapped amid political interference and bulging labor costs, has posted a profit in just four of the past 16 years. The airline has also struggled amid fierce competition from European budget carriers as well as soaring fuel and labor costs.

Though unions approved the 2004 restructuring plan -- which includes cutting jobs and spinning off the flight unit from the less profitable ground services business -- they claim Alitalia's management has not stuck to the working conditions they agreed to.

Government officials are due to negotiate with labor unions Wednesday, and the unions warn that if they are not satisfied with the meeting they could violate a nationwide strike truce timed to cover the Turin Winter Olympics.

"A company in this state can't do much," Maroni said, reiterating that the European Union would not allow government aid for the airline.

Agriculture Minister Gianni Alemanno said that in Wednesday's critical meeting "the government will be listening, to comprehend the (unions') claims and to see if they have to do with the industrial plan and its implementation."

The protests have sent the company's shares plunging, with Alitalia stock falling by almost 9 percent Monday on the Milan stock exchange. On Tuesday, the shares recovered slightly, climbing back 2.9 percent to euro1.07 (US$1.31).

Analysts attributed the rise to Berlusconi's comments in support of the turnaround plan. But those who hoped the restructuring would eventually lead to privatization found reason for disappointment.

"I don't think that the problem would be solved through a privatization of Alitalia because wildcat strikes would continue," Berlusconi said.

He has also acknowledged that "national pride" in the flagship carrier has prevented his government from backing privatization.

Alitalia -- which is a member of the SkyTeam alliance that includes Air France, Delta Air Lines, Czech airline CSA and KLM Royal Dutch Airlines -- has been looking for strategic partners for years.

Il Sole insisted that the company "must look for economies of scale and the right international alliances."

Analysts say a recent euro1 billion (US$1.2 billion) recapitalization, part of the restructuring plan, should allow the company some breathing room.

"The short-term threat from its balance sheet is no longer present, giving the management team time to implement their restructuring," said Chris Avery, an analyst with JP Morgan.

But even if money from the recapitalization can tide Alitalia over, its ability to survive in the long term is unclear.

"Time is not infinite and the European Commission has banned further state aid," Avery said.

Berlusconi's coalition, already trailing the opposition ahead of the April election, is unlikely to take any steps that might anger Italians. Besides, coalition forces are divided over what to do with the airline.

Ministers from the National Alliance, a right-wing party in Berlusconi's coalition that has traditionally favored state industry, have suggested the airline should be protected from failing -- resisting Maroni's call for Alitalia to be left at the mercy of market forces.

Italian government, unions meet as protests by Alitalia workers continue
By ARIEL DAVID
25 January 2006

ROME (AP) - Premier Silvio Berlusconi's top aide and several ministers sat down with Italy's main labor leaders Wednesday to try to resolve a dispute that has grounded hundreds of Alitalia flights at a time when the airline is struggling to survive.

Outside the premier's office, where the meeting began in early afternoon, hundreds of workers held placards and shouted slogans like, "Berlusconi, we are here. We await you."

The meeting was suspended mid-afternoon, and it was not immediately clear when -- or if -- it would resume. A spokesman for one of the ministers at the meeting said the government would ask Alitalia Chief Executive Giancarlo Cimoli to resume talks with the unions.

The ailing airline, meanwhile, warned travelers that more than 200 flights risked being canceled on Wednesday, as the protests showed no sign of letup.

With a 24-hour train strike slated to begin on Thursday evening in an unrelated labor dispute and an election campaign for the premiership heating up, pressure was building on the government to get the Alitalia workers back on the job.

The workers are protesting Alitalia's restructuring plans, including cutting jobs and spinning off the airline's flight unit from its less profitable ground services business.

They have been picketing at Rome's Leonardo da Vinci airport for days.

The Italian government holds a 49.9 percent stake in loss-making Alitalia, whose future is on the line.

Among participants in the talks was Labor Minister Roberto Maroni, who has raised the specter of bankruptcy for the airline if strikes continue, and has warned that the government won't bail out Alitalia. Berlusconi's right-hand man, Cabinet Undersecretary Gianni Letta, was also attending.

Representing labor at the talks were the heads of Italy's three main nationwide labor confederations.

In an interview on Sky TG24, Berlusconi denounced the unions.

"Citizens should know that if they are camped out in the airport it is the fault of unions on the left," the conservative premier said.

Much of Italy's labor movement sympathizes with the left.

One of the union leaders at the meeting, Savino Pezzotta, criticized the government for not including Alitalia's management in Wednesday's talks.

It is necessary "to start the negotiations, understand everybody's reasons and find solutions," Pezzotta, who heads the CISL labor confederation, told La Repubblica in an interview published Wednesday.

Labor Heads To Urge End To Alitalia Wildcat Strikes
25 January 2006

ROME (AP)--Union leaders said Wednesday they were appealing to Alitalia (AZA.MI) workers to suspend wildcat strikes that have forced the ailing airline to cancel hundreds of flights.

Luigi Angeletti, who heads one of Italy's three main labor confederations, told reporters that the call to suspend the unrest was being issued because unions would meet with Alitalia management and the government Feb. 1. [ 25-01-06 1615GMT ]

"We will explain to our workers that since the objective was to be heard...now it is possible to stop this extreme form" of protest, Angeletti said at a news conference at the premier's office.

Angeletti and other major Italian union leaders spoke at the end of a meeting with Premier Silvio Berlusconi's top aide and several ministers about how to resolve the protests, which have threatened Alitalia's future.

There was no immediate reaction from Alitalia.

The airline had said that more than 200 flights risked being scrapped Wednesday. The last few days had seen striking workers also force cancellation of hundreds of flights.

Even if workers immediately heed the labor leaders' appeal to return to the jobs, flight operations could continue to be hampered until all maintenance of aircraft is restored.

Alitalia strikers return to work

ROME, Jan 26, 2006 (AFP) - Alitalia staff slowly returned to work Thursday after a more than a week of labour unrest, but the airline was still forced to cancel some 170 flights as a backlog of aircraft had to be checked by returning maintenance personnel.

Italy's three main unions called an uneasy truce and asked their members to suspend industrial action after talks late Wednesday with government officials.

The government and unions will hold another meeting on February 1, which Alitalia's management will also attend.

"The government is working for a solution" to the crisis, Prime Minister Silvio Berlusconi told Italian radio.

Alitalia had to cancel several hundred flights since last Thursday, costing it an estimated 10 million euros a day.

Labour Minister Roberto Maroni told parliament on Wednesday the accumulated losses due to work stoppages over four days had cost more than the 39 million euro net loss the company reported for the first nine months of last year.

Unions have been protesting a restructuring plan, which includes 3,700 layoffs and the sale of a majority stake in the airline's ground service to state-owned Fintecna.

Economy Minister Giulio Tremonti said the plan is the only way to save the airline and avoid bankruptcy.

In a statement after Wednesday's meeting, the government said it wants Alitalia's operations to return to normal, partly for the benefit of passengers.

Investors bet on Alitalia, despite strike
By Pratima Desai

LONDON, Jan 26 (Reuters) - Despite wildcat strikes and talk of bankruptcy hanging over Alitalia, two investors have bought big stakes in the carrier, and hedge fund sources say it is part of a trend to buy airlines seen as cheap in a bull market.

London-based Walter Capital Management and Newton Investment Management acquired a 12.4 percent stake in the Italy's biggest airline last month, according to Italian watchdog Consob. Neither fund is known as a vulture-style asset stripper.

"Newton is a long-term investor and bought the stock in a recent issue as it is positive on the company's outlook," said Newton, a subsidiary of U.S.-based Mellon Financial Corp.. Newton has 4.2 percent of Alitalia's stock.

Walter Capital, known in the hedge fund industry as a value investor with around $2 billion under management, holds around 8.19 percent of Alitalia's stock and is the biggest shareholder after the Italian government, which holds 49.9 percent. No one at Walter Capital was available for comment.

The airline has posted a profit just once in the last decade and lagged European peers in lowering costs to compete with the rise of budget carriers.

Labour Minister Roberto Maroni fuelled a 9 percent drop in Alitalia shares on Monday when he suggested it might be time to allow the airline to go bankrupt.

SPURRED BY STRIKE

Strikes at Alitalia this month by trade unions who oppose splitting off ground operations triggered a fresh wave of hedge fund buying. Proposed restructuring, job and cost cuts have persuaded the investors that the airline is worth a punt, sources say.

"Hedge funds bought when Alitalia staff went on strike and they bought BA (British British) in the summer when there were strikes (at airline caterer Gate Gourmet)," a hedge fund manager said.

"Strikes are about working conditions and money and airline unions in most recent cases have lost ... That's generally good for the health of a airline."

The airline's 1 billion euro rights issue late last year, coordinated by Deutsche Bank, did worry investors, given that it was more than the carrier's 800 million euros market capitalisation at that time, but not enough to sell the shares.

Alitalia's shares were last trading up 4.6 percent at about 1.11 euros, a rise of around 20 percent since early December.

Deutsche Bank started coverage of the Italian airline this month with a "buy" recommendation.

"From where I'm standing it looks like a smart bet," a hedge fund trader said. "The rights issue at a big discount helped line the coffers for a battle with the unions."

A TREND

Alitalia is part of a general trend towards greater investor interest in airlines in many countries around the world, with possibly the main exception being the United States, sources said.

"In the U.S., they just go into Chapter 11 (bankruptcy) and then start again," a hedge fund investor said. "But in most cases airline stocks are seen as cheap and laggards in a bull market ... They have a lot of turnaround potential."

Air Canada, a unit of ACE Aviation Holdings Inc., has also attracted the attention of hedge funds and other fund managers, sources say.

The Montreal-based airline said in December that it had achieved a record load factor -- a measure of how many seats it has filled -- for the 20th month running in November.

U.S.-based Cerberus Capital Management has a small stake, less than 1 percent, in ACE Aviation and Franklin Mutual Advisers has nearly 9 percent, according to Reuters data.

"Airline pricing power is much better at the moment ... discounting is rare," the investor said. "The caveat is oil prices ... There may be another shock, but the thinking is that the worst is over, for now anyway."

Oil hit a record high above $70 a barrel after Hurricane Katrina and is currently trading at around $66 a barrel. (Additional reporting by Gerard Wynn)

I wonder how much better the company would do if it simply left Milan as the sole hub.

:no:

Alitalia says Volare buy can open low-cost market

ROME, Jan 28 (Reuters) - Italy's largest airline Alitalia said on Saturday its plan to buy Volare, a smaller carrier in extraordinary administration, is in line with its industrial plan and will allow it to compete in the low-cost market.

Alitalia , which is trying to emerge from years of losses and recent crippling strikes, said in a statement that its 38 million euro bid for Volare would not burden it with any significant debt and offered new routes and airport slots.

Under its 2005-2008 industrial plan Alitalia is looking to significantly increase its domestic revenues and win back market share ceded to rivals including Air One and Ryan Air .

Buying Volare is "fully consistent" with the industrial plan, Alitalia said, "making it possible to compete effectively in the low-cost/leisure segment where the company is currently absent."

It will give Alitalia new slots at some of Italy's main airports including Milan's Linate, the company said, and will offer new routes to Mauritius, Cuba, Mexico (Mexico City and Cancun), the Maldives and Sri Lanka (Colombo).

It will also not saddle Alitalia with any debt linked to Volare's previous activity other than some 700,000 euros of employee severance pay funds, Alitalia said.

Volare has 707 employees, of whom around 70 percent are pilots and cabin crew, Alitalia said.

Alitalia: Volare Buy In Line With Business Plan
29 January 2006

MILAN (Dow Jones)--Alitalia SpA (AZA.MI) said Saturday its plan to buy Italian low-cost carrier Volare SpA is in line with its 2005-2008 business plan, adding that the acquisition would allow it to compete in the low-cost market.

Alitalia is looking to significantly increase domestic revenue as per its business plan.

A Volare acquisition is "fully consistent" with the industrial plan and makes it possible (for Alitalia) to compete in the low-cost/leisure segment where the company is currently absent," Alitalia said in a statement.

Italy's largest carrier said that it will acquire Volare for EUR38 million through a new company controlled by Alitalia.

Volare was declared insolvent in November 2004.

Rome court blocks Alitalia's attempt to buy insolvent low-cost carrier Volare
30 January 2006

ROME (AP) - A Rome court on Monday blocked Alitalia SpA's attempt to buy insolvent low-cost carrier Volare.

The court agreed with Alitalia rival Air One, which argued that the Italian flagship carrier received state aid and thus should not be allowed to buy Volare.

Alitalia said it would appear the ruling.

Since 1997, state-controlled Alitalia received some €3.6 billion (US$4.35 billion) under government-back restructuring.

Alitalia said on Saturday that it planned buy Volare for €38 million (US$45.9 million) by setting up a new company.

Faced with waves of labor unrest, loss-making Alitalia is battling to survive. On Wednesday, representatives of the Italian government, Alitalia and unions are scheduled to meet in a bid to defuse tensions and make headway in securing a future for the airline.

Alitalia says Jan strikes cost 60-80 mln euros

ROME, Feb 2 (Reuters) - Strikes last month at Alitalia cost Italy's largest airline between 60 and 80 million euros ($96.49 million) in lost revenue, Chief Executive Giancarlo Cimoli said on Thursday.

Unions staged the industrial action over fears that Alitalia is pushing ahead too quickly with a spin-off in ground services. Labour is also concerned that Cimoli's turnaround plan, which calls for profit in 2006, will fail to rescue the airline.

Italy Labor Min:Alitalia Won't Get Another Cent From Govt
7 February 2006

ROME (AP)--The Italian government cannot give another cent to help out ailing Alitalia (AZA.MI), Labor Minister Roberto Maroni said Tuesday.

The government holds a just-under 50% stake in the flagship carrier. Before a recent rights issue, its stake was 62%.

The European Commission has banned further state aid for Alitalia. Maroni, on a TV talk show, was reiterating warnings that the government cannot bail out the company.

"The government cannot, and I say, must not, give a cent" to Alitalia, the Italian news agency ANSA quoted the minister as saying on private La7 TV.

"I'm not rooting for its failure, but Alitalia must stay on the market. The unions cannot think that they can do what they want, then the government shows up and writes a check," Maroni was quoted as saying.

Alitalia was recently rocked by wildcat strikes, which forced it to cancel hundreds of flights. Unions approved a 2004 restructuring plan that includes job cuts and spinning off the flight unit from the less profitable ground services, but workers insist that Alitalia's management is not sticking to agreed working conditions.

Alitalia's Loss Narrows Sharply in 2005
By MARIA SANMINIATELLI
27 February 2006

ROME (AP) - The Italian flagship carrier Alitalia said Monday its loss narrowed sharply in 2005 due to higher revenue and lower labor costs.

Alitalia SPA released its financial results for last year a day before the latest summit of government officials, management and unions leaders over the airline's battle for survival.

The company said it lost 167 million euros ($197.9 million) in 2005 versus a loss of 858 million euros in 2004.

Its revenue rose 11.6 percent to 4.8 billion euros ($5.7 billion) as the number of passengers traveling on Alitalia increased by 7.8 percent to 23.9 million from 2004.

Its labor costs fell by 114 million euros ($135.1 million), according to the new International Financial Reporting Standards, in line with a four-year rescue plan the carrier approved last year.

"The measures undertaken during 2005 have allowed (the company) to experience, overall, marked improvements on Alitalia's economic and operative progress ... registering a definite trend reversal compared with the recent past," the carrier said.

Alitalia, struggling with labor costs, has posted a profit in just four of the past 16 years, and, like other longtime European carriers, is buffeted by fierce competition from upstart budget airliners. Soaring fuel costs have also complicated Alitalia's turnaround efforts.

Alitalia lost 520 million euros in 2003, while it managed a small profit of 93 million euros in 2002.

Unions approved a 2004 plan including job cuts and a spinoff of the flight unit from the less profitable ground services businesses. But they claim Alitalia has not kept to its word on working conditions.

Last week, Italy's industry ministry announced that the labor and industry ministers would meet on Tuesday with the heads of Italy's main labor federations and unions for Alitalia's pilots, as well as other workers and airline management.

Labor Minister Roberto Maroni has repeatedly warned the unions that the government cannot bail out Alitalia, which has been hoping that job cuts, other restructuring and a capital increase of 1 billion euros (nearly $1.2 billion) can save it.

Earlier this year, a spate of wildcat strikes over the restructuring plans raised further questions about Alitalia's viability.

Premier Silvio Berlusconi's government, which holds a 49.9 percent stake in Alitalia has talked tough, but with elections scheduled for April, the government can ill-afford the collapse of the national carrier.

Alitalia on Monday night stuck to a prediction made last month that it will return to profit this year, but warned the outlook could change after a board meeting March 10 to evaluate the damage from the recent strikes.

Alitalia denies clash with auditor over '05 loss

ROME, March 1 (Reuters) - Alitalia denied a report that it had clashed with Deloitte & Touche on its 2005 results, in which the airline sharply narrowed its losses, saying on Wednesday the auditor was still reviewing its accounts.

Italy's leading financial newspaper Il Sole 24 Ore wrote that Deloitte had objected to Alitalia's reporting of extraordinary gains that helped limit losses last year to 167.6 million euros ($200.2 million).

That compared with losses of 858 million euros in 2004.

The airline added that Alitalia's Chief Executive Giancarlo Cimoli had not met with Deloitte auditors to discuss the results, as Il Sole reported.

Alitalia's shares were trading 0.2 percent higher on Wednesday at 1.265 euros per share, compared with a 0.3 percent rise on Milan's Mibtel index <.MIBTEL> at 1336 GMT.

Alitalia says it still expects to post profit in 2006 despite strikes, bad weather
10 March 2006

ROME (AP) - Alitalia said on Friday that it still expects to post a profit in 2006 despite a spate of strikes and bad weather which buffeted the struggling Italian airline earlier this year.

"The board of directors, on the basis of an estimate for the first three months of the year and assuming no further negative events such as those of last January, including the weather-related ones, confirmed the target of a positive result" for 2006, the airline said after a board meeting.

Alitalia said the strikes and bad weather cost the company some euro80 million (US$95 million).

In January, several days of strikes forced the airline to cancel hundreds of flights. Heavy snow in northern Italy also hurt service.

Workers have been protesting the company's turnaround plan, which includes job cuts and splits the carrier's flight business from the ground services unit.

Government to seek unions approval for Alitalia plans

MILAN, June 26 (Reuters) - Italy's new centre-left government will discuss with unions any plans for flag carrier Alitalia , a policy change that may avoid the repeated labour strikes which plagued Alitalia over the past two years.

"The government has yet to decide on Alitalia's future," Italy's Economic Devolopment Minister Pierluigi Bersani told journalists on the sidelines of an event in Piacenza.

"We're studying the problem and, naturally, whatever the solution we will first discuss it with the unions."

Alitalia's 10 unions have battled with Chief Executive Giancarlo Cimoli for the past two years as he cut a fifth of the workforce, sold the ground services unit to state holding company Fintecna and as the government cut its stake to just under 50 percent.

Cimoli's attempts to push through his cuts, backed by former Prime Minister Silvio Berlusconi's government, resulted in repeated labour actions and wild cat strikes that cost the carrier tens of millions of euros.

Alitalia hasn't posted an operating profit in the last four years. The Rome-based company said its operating loss widened to 128.8 million euros ($162.1 million) in the first three months of the year, as fuel costs and strikes weighed on results.

Revenues fell 3.1 percent to 965 million euros against the same period in 2005.

Alitalia gets conditional OK for Volare buy

ROME, July 5 (Reuters) - Italy's competition watchdog on Wednesday gave its conditional approval for Alitalia's to buy smaller Volare airline, which has valuable runway slots at Milan's Linate airport.

The Antitrust authority said that Alitalia would have to relinquish two national slots operated by Volare at Linate and two of its own slots for flights from Linate to Paris.

But the authority's approval does not solve all of the problems faced by Alitalia in its planned 38-million-euro ($48.50 million) acquisition of Volare.

The acquisition has been put on hold since May by Italy's highest appeals court for administrative affairs because of formal irregularities in the bid selection process.

And the court still has to make a final ruling on the matter.

Alitalia chief executive Giancarlo Cimoli has estimated that Alitalia could lose 125 million euros in revenue by 2008 if Volare went to Alitalia's closest domestic rival, Air One.

Volare collapsed under heavy losses and debt more than a year ago. It had some 700 employees, of whom about 70 percent were pilots and cabin crew, according to Alitalia. ($1=.7834 Euro)

Alitalia may see management shake-up -govt official
By Paolo Biondi

ROME, July 13 (Reuters) - Italy's largest airline Alitalia may see a management shake-up in the coming days as part of a review of some state-controlled firms by the new government, Economy Undersecretary Massimo Tononi said.

"Within a few days, there could be changes in the management structure. If there will be any, it will be soon," Tononi told reporters.

He also said there could be management changes at road regulator ANAS and state railways Ferrovie.

He added that Alitalia did not have current financial problems but had to make strategic choices related to its weighty "cost structure".

Italy's flag carrier said its operating loss widened to 128.8 million euros ($163.8 million) in the first three months of the year, as fuel costs and strikes weighed on results. Revenues also fell just over 3 percent against the same period last year.

It posts first-half results in September.

Italy's Transportation Minister Alessandro Bianchi, part of the new centre-left government, which took power in April elections, has also repeatedly suggested the time was ripe for changes to the management at the state-run airline.

At a parliamentary hearing on Wednesday, he said Alitalia's management was not fit to run the company.

Unions, which waged crippling wildcat strikes earlier this year, have laid much of the blame on Chief Executive Giancarlo Cimoli, the architect of the airline's turnaround plan.

Alitalia issued a statement earlier on Thursday explaining why its stake in the national market had fallen from around 80 percent at the end of 1994 to just over half at the end of 2005.

It listed reasons including deregulation in the European airline sector, loss of slots at Milan's Linate airport, anti-trust decisions and an "inadequate" government transport policy. Alitalia shares, which were in negative territory before Tononi's comments, were up 1 percent at 1130 GMT.

Alitalia June Passenger Trafic Up 2.9% On Yr
17 July 2006

MILAN (Dow Jones)--Italy's flagship airline, Alitalia SpA (AZA.MI) said Monday it carried 2.2 million passengers in June, up 2.9% compared with the same month in the previous year, the company said in a statement.

Alitalia's June traffic, measured in revenue passenger kilometers, increased 0.5% on the year despite the fact that the capacity, measured in available seat kilometers, decreased 4.2%.

The company said that the load factor grew 3.7% reaching 77.6%.

Alitalia says it will cancel 179 flights Thursday due to strike
6 September 2006

ROME (AP) - Italian state carrier Alitalia said a one-day strike scheduled for Thursday has forced the cancellation of 179 flights, including 74 international flights.

The walkout, called by CGIL, one of Italy's three main labor confederations, was called over concerns about contract renewals and to protest the management of the struggling airliner.

Another one-day air strike originally scheduled Thursday was postponed to Sept. 18 and shortened to four hours, the Sult transportation federation said.

A one-day local bus strike was scheduled for Sept. 15, and an eight-hour train strike will take place Sept. 27, Sult said.

Sult called its strikes over concerns ranging from safety issues to job cuts.

Alitalia to sell units affecting 1,000 staff-source
By Alberto Sisto

ROME, Sept 8 (Reuters) - Alitalia , Italy's largest airline, has told unions that it has begun the sale of administrative and information-technology units affecting 1,000 staff, a union source said on Friday.

The source, who declined to be named, said the sale would affect employees in Rome, Naples and elsewhere. The move was believed to exclusively affect Alitalia's spun-off service unit, which had roughly 9,250 employees at the end of March.

Its main flying unit had 10,873 as of March 31, according to company data.

"The company told the unions about the start of a procedure for the sale of certain branches of the company," the union source said.

Alitalia officials could not be immediately reached for comment.

The airline said on Aug. 30 it would announce within a few weeks new measures to carry out its 2005-2008 turnaround plan, which is meant to return the loss-making carrier to profit.

Hundreds of administrative staff in Rome staged wildcat strikes but there were no immediate reports of any impact on operations.

Unions said they will hold a meeting on Monday to discuss the moves. Alitalia is due to present its first-half results on Tuesday.

Alitalia's old industrial plan had called for the airline, which is nearly 50 percent owned by the state, to turn a profit in 2006 after years of losses. It withdrew that pledge in May, at least temporarily, when it announced a year-on-year widening of its first quarter operating loss.

Analysts are waiting for Alitalia to give a 2006 forecast along with first-half results on Tuesday.

Alitalia blames cost of fuel, increased competition for increase in first-half net loss
12 September 2006

ROME (AP) - Italian carrier Alitalia SpA said Tuesday its first-half net loss widened because of increased cost of fuel, competitive pressure from low cost-carriers and the negative impact of a series of strikes.

The state-controlled airline said its net loss for the six months ending in June was €221 million (US$280.9 million), from a loss of €125 million in the same period a year earlier.

Earnings before interest and tax rose to €132 million (US$167.8 million) from €84 million same period a year ago.

In a statement, Alitalia said it expects to post a positive result in the second half of the year.

Alitalia is dogged by political and union interference at a time when airlines are struggling to maintain profits in highly competitive markets and as fuel bills soar.

Strikes by workers unhappy with the airline's restructuring plans rocked Alitalia as recently as last week. A week of wildcat picketing in January forced the airline to cancel hundreds of flights.

The restructuring strategy includes cutting jobs and spinning off the airline's flight unit from its less profitable ground services business.

Italy's Economy Minister Tommaso Padoa-Schioppa in August publicly backed Alitalia Chief Executive Giancarlo Cimoli after reports suggested he would be fired because ministers thought management was not fit to run the airline.

Wednesday October 11, 1:12 AM
'Out of control' Alitalia heading to bankruptcy: Italian PM

MILAN (AFP) - Alitalia will go bankrupt unless a rescue plan is put in place within three months, Prime Minister Romano Prodi said as he described the finances of Italy's flag-carrier airline as "completely out of control."

"Alitalia is undergoing the most difficult period of its history," Prodi said at a meeting with transportation unions, according to participants quoted by Italian news agencies. "The situation is completely out of control, and I see no parachute".

"We have until the end of January to find a solution and avoid bankruptcy," he said.

The company forecasts a heavy second-half loss this year after registering a loss of 221 million euros (277 million dollars) in the first half and faces the fate of other medium-sized national airlines that have gone under, such as Belgium's Sabena, Swissair and Air Lib of France.

Unable to stanch its losses -- 167 million euros in 2005 -- Alitalia did not even try to balance its books this year, with red ink expected to approach 300 million euros, according to an internal document quoted by the press.

Alitalia, which is 49 percent controlled by the Italian government, has failed to turn itself around barely more than a year after raising one billion euros, covered by a group of banks and the state, to launch an ambitious restructuring plan.

What is more, relations with the unions began to nosedive with the plan, which called for 3,700 job cuts from the company's 20,000-strong workforce.

Prodi's office issued a statement saying it would place priority on "seeking strategic international alliances" in the bid to rescue the company.

Alitalia has frequently sought closer ties with Air France-KLM, but the Franco-Dutch company, which holds a two percent stake in the Italian carrier, has declined pending improvements in its financial outlook.

The transport ministry also suggested a fresh appeal to private investors, as the state is no longer able or willing to intervene financially.

Fabrizio Solari, secretary general of the left-wing Filt-CGIL union, said Prodi's proposed timeline was too long. "It will be necessary to act right away to remain alive in three months," he said.

The unions are especially angry over company president Giancarlo Cimoli's desire to sell off assets such as computer services and call centers.

The fate of Cimoli, shunned by several ministers and the unions, is expected to be decided in the coming days during a meeting with Prodi.

Labor relations have soured over recent months, with Cimoli demanding more flexibility from the workforce, which for its part accuses management of failing to honor commitments.

Such disputes have further tarnished the company's image, already blackened by abrupt flight cancellations, flight delays and missing baggage.

Transport Minister Alessandro Bianchi suggested that Alitalia needed a way to become stronger to enable it to seek a partner abroad.

"Alitalia should be placed in the heart of air transport as other countries have done," he said.

Alitalia may decide to limit its operations to a single airport, from the current two in northern Milan and one in Rome.

"The company needs productivity gains on the order of hundreds, not tens, of millions," said analyst Mike Powell of Germany's Dresdner Kleinwork bank. "But that's going to be hard. Alitalia is the last company led by unions and politicians."

Alitalia's share price closed 1.97 percent up at 0.83 euros on the Milan stock exchange after Tuesday's developments.

Alitalia says bankruptcy talk unfounded

ROME, Oct 12 (Reuters) - Loss-making Italian airline Alitalia said in a statement on Thursday that recent talk that it was at risk of bankruptcy and in need of a capital increase was unfounded.

Earlier this week Italian Prime Minister Romano Prodi called the carrier's condition "out of control" and pledged a new strategy for Alitalia by January. The Italian state owns just under 50 percent of the airline.

Alitalia's statement also comes as Italy's transport minister on Thursday said the country would only welcome an outside investor in Alitalia if they were willing to pump money into the carrier to boost its prospects.

"If there is a company with its eyes on Alitalia, as there are many at this moment, with the air of crows waiting for a victim, they are mistaken," Alessandro Bianchi told journalists in Luxembourg on the sidelines of a European Union meeting.

Prodi is expected to meet with the company's embattled Chief Executive Giancarlo Cimoli next week.

The Italian exception - European airlines
14 October 2006
The Economist

Among Europe's flag carriers, Alitalia is faring worst against low-cost competitors

ITALY'S prime minister, Romano Prodi, this week described the nation's flag carrier, Alitalia, as out of control with no parachute. He said the government and the airline had only until January to hammer out a solution to avoid bankruptcy. So it looks as though Italy's flag carrier will at long last go the way of Swissair and Sabena, the Belgian flag carrier. Although the unions called off a one-day strike this week, they still exercise powerful control over any attempt to cut costs and drag the airline into the real world. An internal company report says the national carrier cannot make a profit even from capital already invested, and it cannot grow to survive because the more it flies, the more it loses. This week Alitalia's boss, Giancarlo Cimoli, was due to testify before a government committee, but his appearance was postponed and there were calls for his resignation.

A year ago Alitalia raised about euro1 billion ($1.2 billion) in a rescue rights-issue of shares, backed by the government, which owns 49% of the airline. Then it was talking confidently of moving swiftly into profit. But its plans were all based on a super-optimistic forecast of a $40 oil price, even as it was heading over $60. Predictably, after a damaging round of strikes last spring, Alitalia's losses have grown again after shrinking a little. It made a loss of euro221.5m in the first half of this year, up from euro124.7m in the same period in 2005. Mr Prodi and Mr Cimoli are now trying to frighten the union into concessions to save the airline. But investors and frustrated travellers should not get their hopes up: Alitalia rescues come round as frequently and fruitlessly as changes of government. It has chomped its way through nearly euro5 billion in the past ten years, to no avail.

Apart from the difficulty of cutting jobs and raising productivity in the Italian public sector, Alitalia is inherently less well-placed than other national airlines, such as Air France/KLM, Lufthansa and British Airways, to cope with the growing competition in Europe from vibrant low-cost carriers, led by Ryanair and easyJet. Whereas other flag carriers make about two-thirds of their revenues from long-haul flights, where there is no low-cost/low-fare competition, Alitalia has barely one-third of its business in long-haul. In its home market it faces fierce competition from four Italian budget airlines, plus the aggressive presence in the country of Ryanair and easyJet. Both long ago smelled the blood in the water around what a former easyJet boss called one of the most inefficient carriers in Europe.

Earlier this year Alitalia tried to buy the remains of one low-cost competitor, Volare, which went bust in 2004, only to have the deal overturned in a court challenge by a competitor earlier this month. Buying or starting an in-house low-cost carrier was one of the earlier strategies employed by flag carriers trying to fend off budget airline competition. But British Airways and Air France/KLM have now moved on to a more straightforward approach, although Lufthansa still has its own in-house budget carrier.

If you can't beat 'em...

The response of the more robust flag carriers to the low-cost challenge is now to attempt to match the budget airlines in their short-haul flights, while using them to feed traffic into their more profitable full-service long-haul routes. That is what Aer Lingus did successfully under Willie Walsh, whose success there earned him the top job at British Airways last year. No sooner was Aer Lingus privatised by the Irish government earlier this month than Michael O'Leary, the pugnacious boss of Ryanair, made a hostile bid for it—a move which underscores the emergence of the budget airlines as the dominant force in intra-European air travel. Exane BNP Paribas, a French investment bank, reckons that the low-cost carriers' share of the European internal market has grown from 24% last year to 27% now, and predicts that it will reach 33% by 2009.

Mr O'Leary's American investors were appalled by his bid, since the acquisition of Aer Lingus's conventional transatlantic long-haul routes would sully the purity of Ryanair's ultra-low-cost business model. But his move can simply be seen as opportunistic, since Aer Lingus was probably under-priced at sale. Taking control of Aer Lingus would also put him in a powerful position to stop Dublin airport's grandiose expansion plans, which he fears will put up landing charges at Ryanair's biggest base. And if an open-skies deal were ever signed between Europe and America, opening up London Heathrow, Aer Lingus has slots there which could be converted into transatlantic flights. Its brand would have great appeal to American travellers.

Air France/KLM, Lufthansa and British Airways—the Big Three of European aviation—have all deployed similar tactics in competing head-to-head with the budget airlines. For short-haul flights they have simplified their economy classes, introduced online reservations and virtually cut out travel agents' commissions. Catering has been reduced to sandwiches stored in the back of the plane, and Iberia, Spain's flag carrier, even charges for those now. There are usually three rather than four cabin attendants in economy class, and seat rows are crammed as close together as they would be in an easyJet or Ryanair plane. Meanwhile, poor old Alitalia still struggles to catch up.

Italy's Alitalia seeks partners in Asia: minister

ROME, Oct 15, 2006 (AFP) - Italy is seeking a business partner "in the Gulf, Asia, India, China or Thailand" for its troubled national airline Alitalia, Deputy Prime Minister Francesco Rutelli said Sunday.

Financial rescue for the cash-strapped carrier with losses of 167 million euros (208 million dollars) last year, would depend on a far-reaching industrial plan to be prepared by the government, which has a 49 percent stake in Alitalia, Rutelli said in an interview with the newspaper la Repubblica.

It would also depend on a basic change in direction, injection of private capital and an international alliance, Rutelli said.

"Asia has money and planes but it lacks routes and stopover points," he suggested.

"Others, such as the French or Germans could be less generous allies," the minister speculated.

Italian Prime Minister Romano Prodi this month set a three-month deadline to come up with a new, last-chance rescue plan.

Alitalia has previously proposed a link-up with Air France-KLM, but the Franco-Dutch group, with a two percent stake in Alitalia, has declined this prospect until the Italian company has ensured its recovery.

Unable to staunch its losses, Alitalia has decided not to attempt to balance its books this year and could lose as much as another 300 million euros, according to an internal company document leaked to the press.

Italy PM discusses possible tieups for Alitalia

ROME, Oct 17 (Reuters) - Italy's Prime Minister Romano Prodi discussed possible options to rescue Alitalia in a meeting with the airline's top executive on Tuesday, a statement from Prodi's office said.

The options Prodi and Alitalia CEO Giancarlo Cimoli discussed included partnerships for the carrier, which is struggling amid mounting losses and pressure from unions.

The government has pledged a new strategy for the troubled carrier by the end of January, after Prodi himself last week declared Alitalia's financial condition "out of control".

The identity of any potential partner remains unclear, but Italian Deputy Minister Francesco Rutelli has said he prefers Alitalia form an alliance with an Asian airline.

Thai Airlines could be partner to Alitalia -chair

BANGKOK, Oct 18 (Reuters) - Thai Airways International could be open to a partnership with troubled Italian airline Alitalia , the Thai carrier's chairman told Reuters on Wednesday.

Italian Deputy Prime Minister Francesco Rutelli has repeatedly said Alitalia, which is struggling under mounting losses, needs commercial agreements with Asian airlines to secure its long-term future.

"Thai Airways could be a partner (to Alitalia)," Chairman Apinan Sumanaseni said when asked about the possibility of forming an alliance with the Italian carrier.

But the chairman said that Thai Airways may be limited by its membership of the Star Alliance airline partnership, under which around 20 airlines share things such as loyalty programmes and in which Alitalia does not participate.

"Thai Airways, as partner of Star Alliance, has some restriction on being a partner of other airlines outside the group," he said.

"There are several ways of forming partnerships and cooperations which we have to consider if it really happens." Sumanaseni said, however, that there had been no official discussions about it.

Alitalia tells CEO to consider strategic accords with other carriers
20 October 2006

ROME (AP) - Alitalia SpA has instructed Chief Executive Giancarlo Cimoli to begin studying possible strategic accords with other, unspecified carriers as he struggling airline seeks to turn around mounting losses.

In a statement published late Thursday after a board meeting, the company said it has instructed Cimoli to consider new alliances as a key element of its turnaround strategy.

Alitalia is already member of the SkyTeam global alliance of air carriers, which includes Air France, KLM, Continental Airlines, CSA, Delta Air Lines, Aeromexico, Korean Airlines and Northwest.

Air France has been touted as a partner for Alitalia, but the French airline has said it would welcome an intensified relationship only if the Italian carrier is financially restructured.

Alitalia also plans to introduce new airplanes, boost sales and marketing through direct sales through the Internet, and reduce costs by 24 percent, excluding fuel costs, the statement said.

The company reported revenue of 3.1 billion euros ($3.89 billion) in the first eight months of 2006, falling 82 million euros ($103 million) short of its projections, because of strikes and fuel costs, the statement said.

However, Alitalia has enough cash flow to cover the company's financial needs over the next 12 months, it said.

Speaking earlier this week, Premier Romano Prodi stressed that European Union rules do not allow Italy to grant aid to Alitalia, which reported a loss of 221.5 million euros ($278 million) in the first half of this year, nearly double its loss in the same period last year.

Italy prods Air France to invest in Alitalia

ROME, Oct 24 (Reuters) - Italy's Transport Minister urged Air France on Tuesday to invest in Alitalia and not wait until after the ailing Italian carrier has been restructured.

Alessandro Bianchi said he was concerned at the French airline's position that it would not consider buying into its Italian peer until after its finances are put in order.

"I read with concern (CEO Jean-Cyril) Spinetta's comments in which he said Air France would only be prepared to intervene after the restructure," Bianchi told reporters.

"But if we restructure it, we'll give Alitalia to whomever we like. However, if we do it with Air France, it could have an option."

Air France has often been considered a likely buyer for the loss-making Italian airline, but recently Spinetta made it clear he did not want to invest in Alitalia in its current state.

Bianchi also said the government was not considering appointing a new chief executive to the loss-making airline, which Prime Minister Romano Prodi said must have a rescue plan by January to save it from bankruptcy.

(Additional reporting by Benoit Van Overstraeten in Paris)

Italian administrative court says Alitalia planned purchase of Volare is invalid
2 November 2006

ROME (AP) - An Italian administrative court ruled Thursday that Alitalia SpA's planned purchase of smaller carrier Volare was invalid, dealing another blow to the cash-strapped airline.

The Rome court upheld a previous ruling calling for a new bidding process for Volare, which went bankrupt in 2004. The bid was won by Alitalia with a euro40 million (US$51 million) offer.

The planned purchase of Volare, which owns slots at Milan's Malpensa airport, was part of Alitalia's strategy to make up for domestic market shares losses from low-cost competitors.

Thursday's ruling came in response to complaints by another Italian airline, Air One, the second-highest bidder in the auction for Volare. Air One claims that Alitalia is an unfair competitor and argues that the carrier received state aid and thus should not be allowed to buy Volare.

Alitalia has forecast it could lose euro125 million (US$159 million) in revenue by 2008 if Volare goes to domestic rival Air One.

The government has pledged a strategy to rescue the state-controlled airline by the end of January.

The state-controlled carrier has said its debt rose in September to euro1.02 billion (US$1.3 billion), nearly the same level as its market capitalization. Amid strikes, rising fuel prices and hefty operating costs, the company's first-half 2006 net loss nearly doubled from the same period in 2005 to euro221.5 million (US$282.5 million).

Alitalia female flight attendants allowed to wear trousers instead of skirts
9 November 2006

ROME (AP) - Alitalia's female flight attendants will be allowed to swap their traditional skirts for trousers, breaking with half a century of rigid dress code at Italy's flagship carrier, a union said Thursday.

Following negotiations with unions, Alitalia will offer the new option starting next Wednesday, said Rosanna Ruscito, a representative of the Fit-Cisl union and a flight attendant herself.

"We spend our working days traveling from one airport to the other, with great weather differences, snow and freezing temperatures, only wearing a little skirt," she said. "If I go to a warm country, then I prefer the skirt, but if I go to Chicago, Moscow or New York, I want to be free to choose to wear pants" in the winter.

Ruscito said Alitalia had so far not allowed its female crew members to wear trousers because it wanted to project "an image of femininity."

Alitalia flight attendants are considered icons of Italian beauty and style, and top fashion designers have been enlisted over the years to create their prim jackets and skirts.

Ruscito said some Alitalia ground workers already wear pants, and it would not be expensive for the company to produce more.

No one with Alitalia was immediately available for comment.

Ruscito, who had not yet seen the trousers, said she expected they will the same sober dark blue color as the skirts. She pointed out that other international airlines already allow their flight attendants to wear trousers.

Alitalia denies partnership talks with Thai Airways

ROME, Nov 17 (Reuters) - Troubled Italian airline Alitalia on Friday denied it was in talks with Thai Airways over a partnership.

The denial came after Thai Airways Executive Vice President Wallop Bhukkanasut said in a Reuters interview that his airline was in unofficial talks with Alitalia over a partnership.

Italy's AirOne proposes merger with Alitalia - report
20 November 2006

MILAN (AFX) - The chairman of Italian airline AirOne, Carlo Toto, has proposed to government members a plan to merge AirOne with Alitalia SpA, daily Corriere della Sera said in an unsourced report.

Under the plan, AirOne would sell to Alitalia options on at least sixty A320 Airbus jets, making a capital gain of about 300 mln eur, it said.

According to the newspaper, the capital gain would be paid in newly issued Alitalia shares, making AirOne Alitalia's largest shareholder.

The merged group would have a 70 pct domestic market share and would have to sell a number of slots for antitrust reasons, it said.

Deputy economy minister Vincenzo Visco, economic development minister Pierluigi Bersani, and foreign minister Massimo D'Alema favour the plan, it said.

Italian Govt Mulls Range Of Plans For Alitalia
27 November 2006

MILAN (MF-Dow Jones)--Industry Minister Pierluigi Bersani Monday said the Italian government is examining a range of options, including airline tie-ups, as it seeks to hammer out a rescue plan for struggling state-owned airline Alitalia SpA (AZA.MI).

Speaking on the sidelines of a conference in Milan, Bersani also said the 49.9% state-owned airline was open to "all possible partners" but would need to consider the merits of any business plans that might be put forward by interested parties.

Bersani also pointed out that possible Italian partners shouldn't be excluded from the talks.

"In the dialogue process, Italian industrial services or financial candidates shouldn't be ruled out," he said.

During the weekend Bersani expressed doubts about the potential for a partnership between Alitalia and Air France-KLM (3112.FR), after the Franco-Dutch company's chief executive last Thursday said exploratory talks about a tie-up between the two companies were under way.

Monday he stressed that any potential tie-up would need to be undertaken from the basis of Alitalia's succeeding in strengthening its own financial base after years of losses.

Alitalia unsure when int'l tie-up will be possible

ROME, Nov 29 (Reuters) - Alitalia's CEO Giancarlo Cimoli said on Wednesday that it was still unclear when Italy's largest airline would finally clinch a tie-up with a "big international group," although this was the only option.

"When this integration will be possible, we're not able today to say. But the future of Alitalia must be in this direction," Cimoli told a parliamentary commission.

Friday December 1, 8:55 PM
Italy Plans to Sell Down Alitalia Stake
AP

The Italian government announced plans Friday to sell down its 49.9 percent stake in cash-strapped Alitalia SpA as part of its efforts to turn around the nation's flagship airline.

The government is seeking international alliances to try to secure Alitalia's future, and has promised a turnaround plan by the end of January.

A government statement said new shareholders are needed to relaunch the airline. Silvio Sircana, a spokesman for Prime Minister Romano Prodi, said the government had not yet determined how many shares it would sell.

The Italian stock exchange suspended trading in Alitalia shares pending the announcement from the company. They were up 1.2 percent at 86 euro cents ($1.13) when trading was halted.

Alitalia has reported widening losses due to higher fuel costs, competition from low-cost carriers and the impact of a series of strikes.

CEO Giancarlo Cimoli told a parliamentary committee this week that integrating Alitalia into a big international group is its only hope for survival.

Alliance talk has centered on Air France-KLM, with which Alitalia already has a small cross-shareholding. But Prodi has expressed concerns and Italian Industry Minister Pierluigi Bersani said last week that he didn't see that alliance as an optimal deal.

Air France-KLM CEO Jean-Cyril Spinetta said last week that exploratory talks between the two companies were under way, but insists Alitalia must improve its finances before partnering with another airline.

Other potential partners are German airline Deutsche Lufthansa AG, Thai Airways International PCL, Air China and Emirates Airline.

Alitalia, which hasn't posted a profit in the last four years, on Tuesday reported a 6.3 percent decrease in net debt to 937 million euros ($1.2 billion) in October from 1 billion euros ($1.3 billion) in September.

Lufthansa has no current plans to take stake in Alitalia

FRANKFURT, Dec 1, 2006 (AFP) - German flag carrier Lufthansa has no plans at present to take a stake in its Italian rival Alitalia, a spokeswoman said Friday after the Italian government announced plans to sell a controlling stake in its national airline.

"We've nothing in the pipeline," the spokeswoman said after Milan said it would sell a stake in Alitalia via "a competitive procedure and direct negotiations."

However, the Lufthansa spokeswoman refused to confirm or deny the general possibility of the German airline taking a stake in the troubled Italian carrier.

"You never know what will happen in the coming weeks," she said.

The Italian government still holds a 49.9-percent in Alitalia, which last week revealed it had begun tentative talks on a possible tie-up with Air France-KLM, but the French airline has laid down restructuring of Alitalia as a condition for any deal.

Alitalia and Air France-KLM have already exchanged 2.0 percent of the shares in each of their companies, but Alitalia chief executive Giancarlo Cimoli said he was also exploring possible solutions with other partners.

On Thursday, Lufthansa declined to comment on a possible tie-up with rival Spanish airline Iberia, which had also indicated that it was open to closer ties with other airlines.

New Alitalia rescue effort favors major Italian investor

MILAN, Dec 5, 2006 (AFP) - The Italian government plans to sell at least 30.1 percent of national flag carrier Alitalia, with conditions that appear to favor a big Italian investor rather than a foreign competitor.

The latest plan to rescue the loss-making airline triggers an Italian law that would require a potential buyer to bid for the whole company, according to a surprise announcement by the economy ministry on Tuesday.

The tender will probably be launched by the end of this year, the economy ministry said.

The Italian state, which currently owns 49.9 percent of Alitalia, had announced Friday that it intended to cede control in the company, but it was expected to sell off half of its stake.

Italian Prime Minister Romano Prodi commented: "We spoke of ceding a majority share, and 30.1 percent constitutes a majority (of the government stake). It seemed to me fair to state the figure."

The ministry announced selection criteria that seemed aimed at discouraging speculation.

The tender would require commitments to provide services throughout Italy and to maintain the national identity, insignia and brand of the airline, the ministry said, adding that it would require a "detailed industrial plan."

Trading in shares in Alitalia had been suspended pending the statement after showing a fall of 0.7 percent to 0.95 euros. But that trend was reversed when trading resumed, and the share price closing up more than 6.0 percent at 1.02 euros on the Milan stock exchange.

Alitalia said recently it had begun exploratory talks with Air France-KLM on a possible alliance. But the French airline has consistently maintained that any tie-up would be conditional on a restructuring of the Italian company.

Italian press reports have also speculated on possible interest in Alitalia from a consortium grouping Italian investors such as the head of the carrier Air One, Carlo Toto, in conjunction with Banca Intesa.

Another consortium headed by Italian businessman Carlo De Benedetti could also make a move for Alitalia.

The reports said the level of employment guarantees sought by the Italian government could prove crucial to attracting takeover candidates, notably from outside Italy.

Alitalia suffered financial losses in eight of the 10 years to 2005, and is this year forecasting a shortfall surpassing the 167 million euros (214 million dollars) it reported in 2005.

In the first nine months of 2006 the airline recorded a pre-tax loss of 276 million euros, against 168 million in the same period of 2005.

The Italian government saved Alitalia from bankruptcy in 2004, and last year began implementing a restructuring plan that called for 3,700 job cuts and a capital increase of one billion euros covered by a group of banks and the state.

But the plan triggered resistance from unions. Labor relations have soured over recent months, with the company demanding more flexibility from the workforce, which for its part accuses management of reneging on commitments.

Such disputes have further tarnished the company's image, already hurt by abrupt flight cancellations, flight delays and missing baggage.

Prodi warned in October that Alitalia would go bankrupt unless a rescue plan were put in place within three months, describing company finances "completely out of control".

He said: "Alitalia is undergoing the most difficult period of its history. ... The situation is completely out of control, and I see no parachute.

"We have until the end of January to find a solution and avoid bankruptcy."

Prodi's office also issued a statement that it would place priority on "seeking strategic international alliances" in the bid to rescue the company.

The possibility of an alliance with Air France-KLM appears to be fading however because of the conditions posed by the French-Dutch airline, whose leaders say there are hard choices to make -- notably as to whether to drop or limit operations of one of the airline's two hubs, Milan and Rome.

They also question the insistence on continuing losing routes.

On the other hand, Air France boss Jean-Cyril Spinetta promised that an alliance would not lead to cuts in Alitalia's 10,050-strong workforce, and that its brand would be maintained.

Alitalia could leave Sky Team alliance: minister

PARIS, Dec 11, 2006 (AFP) - The financially troubled Italian airline Alitalia could end its commercial ties to Air France and the Sky Team alliance, Italian Transport Minister Alessandro Bianchi said in an interview published Monday.

He told the newspaper La Tribune that a 200-million-euro (264-million-dollar) penalty for breaking ties to Air France would not affect a decision to leave.

Alitalia and Air France-KLM have exchanged two percent of the shares in each of their companies and are also members of Sky Team, a commercial arrangement that groups 10 international airlines.

The Italian government has a stake of 49.9 percent in Altialia but last week said it wanted to sell at least 30.1 percent of the airline, with a requirement that a buyer bid for the whole company.

"Air France would like to buy Alitalia at the lowest possible price to make it a regional company, with operations limited to Paris-Rome, Paris-Milan and domestic flights," Bianchi said.

But he added that "a buyer will have to tell us that the company must re-capture its dominance on the internal market, at a level of 70 to 80 percent ... and also that Alitalia will develop its international routes."

Rivals should join forces with Alitalia-Italy min

BRUSSELS, Dec 12 (Reuters) - Italian domestic rivals should consider joining forces with the country's largest airline, Alitalia , Transport Minister Alessandro Bianchi said on Tuesday.

"It wouldn't be a bad idea if two or three ... important Italian airlines (joined) together ... in an agreement to reach a critical mass," Bianchi told reporters in Brussels, adding this was only his personal view.

The government hopes to sell at least 30.1 percent of the carrier, whose losses are expected to top 200 million euros this year. Italian regulations would force any bidder for more than a 30 percent stake to make all-cash bid for the entire airline.

Air One, Alitalia's closest rival, has not commented on whether it would be interested in the stake.

"It's no use to have investment funds that come in, buy it and sell it two months later. We want entrepreneurs. The entrepreneurs must be found," Bianchi said.

He said Prime Minister Romano Prodi himself is eyeing Alitalia's future alliances, something which Bianchi said will be determined after the stake sale.

Bianchi told a French paper in an interview published on Monday that fines would not prevent Alitalia from severing its ties with Air France-KLM and the Skyteam alliance, if it decides to do so.

Italian entrepreneur says he's ready to buy stake in failing Alitalia
13 December 2006

MILAN, Italy -- An entrepreneur who founded the Tod's shoe brand said Wednesday he would be prepared to buy a stake in airline Alitalia SpA, an Italian news agency reported.

Diego Della Valle is the first Italian businessman to respond to the government's plan to sell a stake of at least 30 percent in the cash-strapped airline.

"If a group of Italian entrepreneurs is going to join forces to make a bid for the company, I would consider playing a role," Della Valle said, according to the MF-Dow Jones news agency.

Under the government's offer, any potential buyer must come up with a recovery plan for the airline, guarantee jobs, national routes and Alitalia's national identity and brand.

Alitalia shares were trading down 0.2 percent at €.99 (US$1.30) on the Milan stock exchange.

No payroll target for Alitalia buyer, govt says

ROME, Dec 18 (Reuters) - Italy's government has not set a precise target for the number of workers it wants to see remain on Alitalia's payroll following the privatisation of the loss-making airline next year, the economy minister said on Monday.

"On employment, it's not been said that there will be precise obligations," Tommaso Padoa-Schioppa said.

"It's obvious that the entrepeneurs who will make bids should present an industrial plan that takes into account the state of Alitalia's work force."

The government is due to soon launch a tender process to sell at least 30.1 percent of Alitalia shares, giving up its controlling 49.9 percent stake and forcing the buyer to make a full takeover bid.

The Treasury has stated that a buyer would have contractual obligations including "offering adequate service and territorial coverage, employment levels and keeping the firm's national identity, logo and brand."

Investors fear they may not get a free hand to restructure the loss-making airline, and two prominent businessmen said last week they were not interested in bidding for Alitalia.

Padoa-Schioppa said Alitalia's privatisation process would be completed over a six-month period.

Italian government publishes Alitalia privatization details
29 December 2006

ROME (AP) - Potential buyers for Alitalia must guarantee the airline's 18,000 jobs, national routes and the Italian identity of the Alitalia brand, the Economy Ministry said Friday.

The ministry, in a document published on its Web site, said expressions of interest for its stake in the struggling flag carrier must be presented by Jan. 29. Buyers must have minimum capital of 100 million euros ($131.73 million).

The government is seeking an investor or group of investors to buy at least a 30.1 percent stake in the airline as it sells down its 49.9 percent share. It has not been determined exactly how great a stake the government will retain.

Alitalia shares closed up 6.15 percent at 1.05 euros ($1.38) on the Milan stock exchange.

The Italian government reiterated it would pick the winning bid based on its economic offer and the ability of its industrial plan to "develop and relaunch" the ailing airline.

Alitalia has reported widening losses mainly blamed on higher fuel costs, competition from low-cost carriers and the impact of a series of strikes. CEO Giancarlo Cimoli said last month that integrating Alitalia into a big international group is its only hope for survival.

Unions oppose Alitalia's privatization and planned another 24-hour strike for Jan. 19.

Italian minister against Air France takeover of Alitalia

ROME, Jan 2, 2007 (AFP) - Italian Transport Minister Alessandro Bianchi said Tuesday he "would not be happy" with a takeover by Air France of Italian airline Alitalia but he would not intervene to prevent it.

Asked on Italian radio station Radio 24 about a bid by Air France, he said he feared that "a large European company would buy Alitalia to turn it into a regional company by claiming for itself the large passengers flows and the big hubs".

Referring to a takeover by the French group, he added: "In conclusion, I would not be happy with it, but I would adapt to it."

The Italian government offically invited bids for the acquisition of state-controlled Alitalia on December 29 under a plan that could see the state's total disengagement from the troubled airline.

The buyer would have to bid for a stake of between 30.1 and 49.9 percent of the company, with bidders set a deadline of January 29 to put forward their offers.

Air France-KLM has frequently been mooted as the most likely partner for loss-making Alitalia, given existing links between the airlines, but the French company has insisted that it would only bid following the restructuring of Alitalia.

Italian government publishes Alitalia privatization details
29 December 2006

ROME (AP) - Potential buyers for Alitalia must guarantee the airline's 18,000 jobs, national routes and the Italian identity of the Alitalia brand, the Economy Ministry said Friday.
What private company is going to accept those regulations?

:crazy:

nothing to worry about, such problems occur with all countries' airlines

nothing to worry about, such problems occur with all countries' airlines
no.

AirFrance was profiltable before it merged
KLM was profitable before it merged
IBeria is profitable
British Airways ir porfitable.

Possible Alitalia bidder to meet unions - source

ROME, Jan 3 (Reuters) - A group interested in bidding for control of Alitalia has sought a meeting with Italy's airline unions next week to discuss a plan to salvage the airline, a union source told Reuters on Wednesday.

The meeting was requested through a letter from a Milan law firm representing the group of financial investors and an airline sector entrepreneur whose identity is not known, the source said.

But a non-union source downplayed the meeting, and said the group was not interested in bidding for Alitalia but rather was keen on being involved in Italy's airline sector in a possible consulting role. No date has been set for the meeting, the source said.

Italy opened the bidding process for the loss-making airline last week as the government looks to unload at least 30.1 percent of its 49.9 percent stake.

When Rome first announced it would sell down its stake, Italian newspapers were rife with speculation that Italian entrepreneurs could form a consortium to bid for the airline.

But since then, two prominent Italian businessmen -- Alessandro Benetton, vice chairman of the Benetton Group and Carlo De Benedetti, owner of L'Espresso publishing group -- have denied any interest in such a move.

Analysts have also speculated on possible bids by rivals like smaller Italian carrier Air One and longtime potential suitor Air France KLM , but no leading contenders have emerged so far.

no.

AirFrance was profiltable before it merged
KLM was profitable before it merged
IBeria is profitable
British Airways ir porfitable.

It's better to say:

AF was unprofitable untill the government sold it
KL had to merge with AF due to the continuous loss of money
IB is bleeding money every minute that God's gives to the world
BA is a little bit profitable, but without cash, that means that it could become suddently unprofitable

Air France CEO quits Alitalia board, spurs bid hopes
By Alberto Sisto and Deepa Babington

ROME, Jan 17 (Reuters) - The head of Air France-KLM has resigned from the board of Alitalia , allowing the French airline to keep its options open on a possible bid for the unprofitable Italian flag carrier.

Air France-KLM Chief Executive Jean-Cyril Spinetta's departure pushed Alitalia shares up as much as 3 percent, though bankers cautioned the move may more likely reflect the airline's desire to give itself maximum flexibility.

"I think the Italians overestimate the importance of Alitalia to Air France-KLM," a senior French banker said. "In a way, things might have to get worse and really hit bottom before it's the right time to get involved."

Elsewhere the Alitalia sale scenario was brightened by unions calling off a strike planned for Friday, after the Italian government agreed to meet them to discuss the airline's privatisation.

Air France, with a 2 percent stake in Alitalia, has long been considered a possible buyer but has given no sign of being in any hurry to do so, despite political pressure from Rome to declare its hand and a public nudge from French President Jacques Chirac to work more closely.

The Franco-Dutch carrier has repeatedly said no deal would be possible until the Italian carrier turns itself around.

Shares in Alitalia closed up 2.1 percent at 1.059 euros after rising 3 percent in heavy volume earlier in the day.

Spinetta's departure left Alitalia's board effectively dissolved, because its statutes stipulate the board must have at least half its normal capacity of five members to be functional. Alitalia said it would hold a shareholder meeting to name a new board by the end of February.

The current board was due to convene on Friday but that meeting was cancelled as it is now left with just two members, CEO Giancarlo Cimoli and Treasury representative Giovanni Sabatini. Gabriele Checchia resigned this week from the board after accepting the post of Italy's ambassador to Lebanon.

NO QUICK ALLIANCE

Spinetta had held a seat on the board since 2002 after the two airlines struck a code-sharing and cross-shareholding deal.

"Since there is a bidding process launched by the Italian government and given that Air France-KLM is a business partner of Alitalia, its CEO cannot be part of the board anymore," the French airline said in a statement.

A senior source close to Air France-KLM said recently it would not be bounced into a quick alliance with Alitalia and welcomed the start of exploratory talks last November as a chance to cool off some of the pressure for a rapid tie-up.

Alitalia has not posted an annual profit since 2002. Last year it lost money at the rate of 600,000 euros a day, and it suffers from frequent strikes and a bloated workforce. Italy's government last month put it up for sale after repeated rescue attempts over the years failed to turn the airline around.

Italian Prime Minister Romano Prodi said last week he saw merits in an Air France purchase of Alitalia but expressed doubts on whether the deal would happen. He expressed surprise on Wednesday over Spinetta's departure and said Alitalia's sale should continue transparently without any interference.

Prodi's government has said it wants to sell at least 30.1 percent of the airline, which would force a buyer to launch a full offer. It has set a Jan. 29 deadline for bidders to express interest in Alitalia.

No leading candidates have emerged to buy Alitalia so far, with the bidding process largely drawing tentative interest from investment banks and private equity funds.

Private equity fund Management & Capitali , founded by Italian entrepreneur Carlo De Benedetti, has said it is considering a possible bid, while investment bank Rothschild [ROT.UL] is looking to put together a consortium to bid for the airline, according to a source.

Another turnaround shop -- Atlantis Capital Special Situations -- said on Wednesday it was considering putting together a possible deal for the airline. (Additional reporting by Tim Hepher and Jean-Michel Belot in Paris, with Lisa Jucca, Massimo Gaia and Jo Winterbottom in Milan and Robin Pomeroy in Rome)

Who will take over loss-making Alitalia? Preliminary bids due

ROME, Jan 29, 2007 (AFP) - Preliminary bids were due Monday for Italy's flagship airline Alitalia, which was 380 million euros (490 million dollars) in the red last year, but potential buyer Air France-KLM was expected to stay mum on its intentions.

While "expressions of interest" are due by 6:00 pm (1700 GMT) Monday, no one is required to make a firm offer and the exercise does not close the door to future bids.

The Italian government, which controls 49.9 percent of the company, is selling a stake worth at least 30.1 percent in order to trigger an automatic bid for the rest of the company under Italian law.

No potential buyer has officially bid for the airline, and Air France-KLM can maintain the suspense another few weeks or more.

"Expressions of interest" received Monday still leave room for a later candidacy since any consortium can open itself to new partners before bids are firmed up.

The process is set to last six months, according to the economy ministry, which is to issue a communique Monday evening.

Press reports said Air France-KLM, Europe's biggest airline, is considering this strategy because it would allow the French-Dutch company to join the race later if a rival such as Lufthansa threw its hat in the ring.

The dire state of Alitalia's finances was apparent in Sunday's revelation of 2006 losses in a report to the stock exchange authority Consob. A year ago, the company had projected that it would break even by now.

Consob requested the report after Alitalia was forced to cancel a board meeting on January 19 because of the resignation of Air France-KLM chief Jean-Cyril Spinetta, effectively dissolving the panel.

The cost of taking over Alitalia is estimated at about 1.5 billion euros, its current stock market capitalisation, plus the cost of renewing its aging fleet of 183 aircraft and assuming its debt of about one billion euros.

In the invitation to tender, Italian Prime Minister Romano Prodi's center-left government set numerous conditions, including that the company maintain its brand and national identity, the cities the airline serves and the size of its work force.

The main liability is the lack of room for maneuver in restructuring the carrier in the face of strong unions ever prepared to stage crippling strikes.

Alitalia said it had enough liquidity to survive "more than 12 months" but confirmed in the statement that it could no longer achieve the targets it set in late 2005 under a plan that enabled the company to obtain one billion euros in new capital.

Among other possible bidders is the Management and Capitali fund of industrialist Carlo de Benedetti, which specialises in turning failing companies around.

The Italian company Air One, a Lufthansa partner, may also show an interest as well as a consortium between the Rothschild investment bank and the private investment firm Texas Pacific Group (TPG), according to Italian press reports.

Alitalia sale takes off, 2-month timetable seen

MILAN, Jan 30 (Reuters) - Alitalia's sale has taken off with a surprising 11 offers, but without key partner Air France, and signs emerged on Tuesday some bidders could quickly drop out in a bid process which one minister said he hoped would be wrapped up in two months.

Most of the interest has come from buyout funds betting on a recovery at Alitalia , which is losing 1 million euros ($1.3 million) a day to labour problems and high fuel costs, but Italy's second-largest bank UniCredit also bid.

Long-time commercial partner Air France-KLM did not express interest by Monday's 1700 GMT deadline, saying conditions were not right for a bid now.

Transport Minister Alessandro Bianchi said Air France could still come forward, at the same time as he ruled out one of those who had thrown their hat in the ring -- Fabio Scaccia, a professor who says he doesn't have a penny to his name.

"In this phase, I think being on the sidelines is the wisest decision for (Air France), they are waiting to see what happens," Bianchi told La Stampa newspaper in an interview published on Tuesday, headlined "Air France will arrive".

Bianchi added that Scaccia "will be excluded", because he is an individual and therefore ruled out from the sale.

Industry Minister Pierluigi Bersani said another two months was needed to close the sale, adding in comments quoted by newspapers: "I hope it won't be any longer because the issue is urgent."

Italy, which holds 49.9 percent of Alitalia, is seeking bidders for at least a 30.1 percent stake, forcing any buyer to make an offer for the entire airline.

Those expressing interest by Monday's first deadline included U.S. buyout fund Texas Pacific Group Ventures Inc. [TPG.UL], UniCredit SpA's investment bank arm and Carlo Toto, the head of low-cost Italian airline Air One, the Treasury said in a statement on Monday.

Italian entrepreneur Carlo De Benedetti's Management & Capitali SpA , known for turning companies around, U.S. firm MatlinPatterson Global Advisers and Britain's Terra Firma Investments were also on the list.

Lesser known names were Wonders & Dreams, a company run by Italian financier Paolo Alazraki, and Net Present Value, a group backed by a pilots' association, whose head Massimo Notaro told La Repubblica newspaper they were "sick of seeing temporary managers, who in two or three years ruin the company's value."

The leader of another of the airline's unions, Fabrizio Solari, said late on Monday the expressions of interest "carry different weight and I think the final buyer will be someone that is not on the list."

Italian newspapers were speculating that several of the current players might not stay the course.

Analysts say the issue is also about the price that an eventual bidder might pay for the airline, whose illiquid shares closed at 1.093 euros on Monday.

"You'd have to be very, very brave to pay even a quarter of the current share price," said Mike Powell, an analyst at Dresdner Kleinwort Securities.

Alitalia sale attracts 11 potential bidders
By Adrian Michaels in Milan and Tony Barber in Rome

Published: January 29 2007 21:47 | Last updated: January 29 2007 21:47

Initial interest in the sale of Alitalia far exceeded expectations with 11 groups saying they could go on to bid for the stricken airline before the deadline on Monday night.

The Italian government, which is selling the majority of its controlling stake as the first step in an attempted rescue of Alitalia, said it would review the “manifestations of interest” in the next few days.

1. AP Holding S.p.a. (amministratore unico Carlo Toto) - Air One

2. Benstar-Saturn Enterprises, Ltd

3. Fabio Scaccia (persona fisica)

4. Management & Capitali S.p.a. - Cerberus European Investments, LLC - ELQ Investors, Ltd - Lefinalc S.p.a. (Alcide Leali)

5. MatlinPatterson Global Advisers, LLC

6. Net Present Value S.p.a.

7. Porcellana Castello S.p.a. - Capper-NO S.p.a.

8. Terra Firma Investments (GP) 3, Ltd

9. Texas Pacific Group Europe, LLP

10. Unicredit Banca Mobiliare S.p.a.

11. Wonders & Dreams UK, Ltd (Paolo Alazraki)

Air One, the Italian airline, is on the list and the rest are mainly financial groups. Although the number of bidders outstripped forecasts, the initial expressions of interest are a long way from maturing into bids.

Many of the people involved have privately said that the government would have to give them a free hand in restructuring Alitalia, which said at the weekend that it expected a loss of €380m for 2006 – exceeding forecasts and highlighting how difficult a turnround would be.

The government wants the Italian nature of the company preserved along with domestic routes and jobs, though it has signalled a willingness to be flexible on staffing. A sticking point is the need to maintain hubs in Rome and Milan.

Paolo Alazraki, the Italian businessman who is one of the bidders, said: “Pilots, hostesses and the other employees are the only good thing about Alitalia. The rest of it can be thrown away.”

Air France said in a note on Monday that it had not presented a bid and that the conditions were not suitable. It said it would continue to develop its commercial relationship with Alitalia, in which it has a 2 per cent stake.

The bidders along with Air One and Mr Alazraki are: Benstar-Saturn Enterprises; Fabio Scaccia; a group led by Management & Capitali; MatlinPatterson Global Advisers; Net Present Value; Porcellana Castello; Terra Firma Investments; Texas Pacific Group; and Unicredit Banca Mobiliare.

FT.com

January 31, 2007
Italy: Teacher Makes a Playful Offer for Alitalia
By REUTERS

A high school aviation teacher earning 1,200 euros ($1,500) a month became a celebrity by making a fake bid to buy Alitalia as a protest against years of mismanagement.

“This was a provocation. It was my way of making a citizen’s protest,” said the teacher, Fabio Scaccia, who teaches aerodynamics and aircraft design in the city of Frosinone, just south of Rome.

When the treasury ministry, which is auctioning a stake in the airline, announced 11 expressions of interest on Monday night, journalists were stumped by the third entry: “Fabio Scaccia (individual).” He said no one had checked into his credentials, even though the treasury has said bidders must have assets of at least 100 million euros.

So the professor found his name alongside the private equity powerhouse Texas Pacific Group and the No. 2 bank in Italy, UniCredit, on the list. “I make 1,200 euros a month as a teacher, and I think I could run Alitalia for the same salary,” he said.

Alitalia’s chief executive, Giancarlo Cimoli, makes about 225,000 euros ($291,000) each month.

Friday February 9, 7:52 PM
Alitalia to jettison chief executive

ROME (AFP) - The Italian government plans to sack the head of Italy's struggling airline Alitalia, Giancarlo Cimoli, at the next meeting of shareholders on February 22.

The government, which began moves to privatise the airline in December, is the company's largest stakeholder with 49.9 percent of its capital.

A short list of three leading candidates to replace Cimoli may be published later Friday, the financial daily Il Sole 24 Ore reported Friday.

The board of directors was automatically dissolved on January 17 when one of its three members, Air France-KLM CEO Jean-Cyril Spinetta, resigned from the panel.

Cimoli, who has headed the loss-making airline since May 2004 and who is bitterly opposed by the unions, is blamed for last year's loss estimated at more than 380 million euros (490 million dollars).

The economy ministry would not immediately comment on Friday's report.

The decision to replace Cimoli would come as the ministry prepares to announce a list of candiates submitting exploratory bids to acquire the airline.

Four to six of the 11 bidders are considered in the running for the second phase of the process, according to the Italian press.

They include the Italian management fund Management and Capitali, created by industrialist Carlo de Benedetti; the US fund Texas Pacific Group (TPG); Italy's Unicredit bank and the holding company of Italian airline Air One founder Carlo Toto.

M and C specialises in turning failing companies around, while TPG rescued the US airline Continental and is bidding to acquire Australia's Qantas.

Ministry says five potential bidders have made the cut for ailing Alitalia
13 February 2007

ROME (AP) - Five potential bidders, among them the holding company led by the chairman of rival AirOne airline, have made the cut in the evaluation for a possible buyer for Alitalia SpA., the Economy Ministry said Tuesday.

The ministry, which is the biggest shareholder with control of a 49.9 percent share of Alitalia, said the five have until mid-April to present nonbinding offers.

Besides AP Holding SpA, which is led by Carlo Toto, chairman of AirOne, others that will be considered are private equity fund Texas Pacific Group; Italian banking group UniCredit SpA; Carlo De Benedetti's private equity fund Management & Capital, Cerberus European Investments, LLC, ELQ Investors Ltd. and Lefinalc SpA; and MatlinPatterson Global Advisers, LLC, the ministry said in a statement.

The list was whittled down from 11 private investors originally expressing interest.

The government announced in December conditions for the sale of at least 30.1 percent of the airline to a buyer with a turnaround plan.

The airline said last month it expects operating losses of about €380 million (US$490 million) for 2006. It has blamed strong competition from low-cost airlines, higher fuel costs and several strikes by employees that grounded flights.

Italy to keep maximum 10 percent stake in Alitalia after sale
23 February 2007

MILAN, Italy (AP) - The Italian Treasury said Friday it will retain a maximum stake of 10 percent in state-controlled Alitalia SpA, setting out conditions for the next round of bidding in the sale of the unprofitable airline.

Bids for 49.9 percent of state-owned Alitalia from a previously selected shortlist of contenders must be handed in by April 16, the treasury said in a statement.

The details for the next round of bidding come as the treasury seeks to keep the sale of the struggling carrier on track, despite an ongoing political crisis in Italy.

Premier Romano Prodi resigned earlier this week amid wrangling over foreign policy within his center-left coalition. Talks were under way Friday on forming a new government.

The government announced conditions in December for the sale of at least a 30.1 percent stake in the airline to a buyer with a turnaround plan.

Under terms set out Friday, bidders must guarantee Alitalia will "retain an Italian identity" for at least eight years. They also must set out terms of a business plan designed to turn the airline around and explain their staffing plans.

The five bidders include the holding company led by the chairman of rival AirOne airline, private equity fund Texas Pacific Group; Italian banking group UniCredit SPA; Carlo De Benedetti's private equity fund Management & Capital, Cerberus European Investments, LLC, ELQ Investors Ltd. and Lefinalc SPA; and MatlinPatterson Global Advisers, LLC.

Alitalia said last month it expected operating losses of about €380 million (US$490 million) for 2006. It has blamed strong competition from low-cost airlines, higher fuel costs and strikes by employees that grounded flights.

Alitalia board says industrial plan unchanged

ROME, Feb 27 (Reuters) - Alitalia said on Tuesday its newly appointed board had begun to examine the airline's financial accounts but had yet to approve them, and has decided not to change the airline's industrial plan for now.

The board, with new chairman, Berardino Libonati, at the helm, set a meeting for March 9 to continue discussing the airline's financial condition.

Italian newspapers have reported that the board's first step may be to write down the value of the airline's fleet by 400 million euros.

Saturday April 7, 12:27 AM
Aeroflot, Air France-KLM to mull joint Alitalia bid: report

MOSCOW (AFP) - The Russian airline Aeroflot is reportedly to hold talks next week with Air France-KLM on a possible joint bid for the troubled Italian carrier Alitalia.

The Vedomosti newspaper quoted a source close to Aeroflot as adding that negotiations could nonetheless be complicated owing to Alitalia's accumulated debt of one billion euros (1.34 billion dollars).

The Russian airline declined to comment on the report.

Aeroflot surprised the airline sector last week by announcing that it would head a group in bidding for Alitalia, in which the Italian government plans to sell a stake of at least 39.9 percent.

The state currently owns 49.9 percent of the Italian airline, and any buyer of 39.9 percent would be obliged to make an offer for the rest.

Air France-KLM and Alitalia each own 2.0 percent of each other's capital, and all four airlines belong to the Skyteam alliance.

The Franco-Dutch carrier has repeatedly been the subject of rumours concerning an Alitalia takeover, despite its repeated denials.

An Air France spokeswoman said that the companies had not discussed the idea of a joint bid.

"Air France has not been informed of Aeroflot's plans as regards Alitalia and has not discussed it with the Russian air company," she told AFP.

Bidders for the government's shares in Alitalia have until April 16 to present preliminary offers, including business plans for the Italian airline.

Italian government confirms three preliminary offers received for ailing Alitalia
16 April 2007

ROME (AP) - The Italian government on Monday confirmed the receipt of three preliminary offers to take over struggling airline Alitalia.

The three bidders were required to submit offers for a minimum 39.9 percent state in the airline as well as plans to return the Italian flagship carrier to profitability.

The Economics Ministry said in a statement after the closing of the stock market that it would review bids along with its financial adviser, and noted that the bidders' plans could be modified before the offers become binding.

The bidders are: Italy's Unicredit SpA and Russian airline Aeroflot; New York-based asset management group Matlin Patterson Global Advisers LLC and Texas Pacific Group pooling their bid with Italian investment bank Mediobanca; and AP Holding SpA, led by Carlo Toto, chairman of Air One.

Italy, which has a 49.9 percent share of Alitalia, intends to sell at least a 39.9 percent share to a buyer with a turnaround plan. Under the latest terms outlined by the government, bidders must guarantee Alitalia will retain an Italian identity for at least eight years and set out terms of a business plan to turn around the airline.

The government wants to complete the privatization by the end of June.

Alitalia shares closed up at 2.6 percent, at euro1.04 (US$1.41), on the Milan stock exchange.

Alitalia to cancel 356 flights next week due to flight attendants strike
27 April 2007

ROME (AP) - A one-day strike by flight attendants at Italy's Alitalia will likely disrupt the travel plans of more than 30,000 passengers on Thursday, the airline said.

The airline will cancel 356 flights, Alitalia said.

About half of the day's scheduled flights were to be scrapped, including 202 domestic and 154 international flights, Alitalia said in a statement Friday.

The company did not give details on the routes affected.

Flight attendants at Alitalia are in contract renewal negotiations. The ailing flagship Italian airline, which reported widening pretax losses in 2006, has been battered by a series of strikes as well as high fuel costs and low-cost competition.

We flew with Alitalia , Palemro-Milano-Stockholm and....never again.

It was like a comedy, Fawlty Towers :lol:

Dirty, cabin and wc, rude staff, no shopping onboard cause computer didnt work....

It was like traveling in a subway during the rush hour...

Worst ever:nuts:

Alitalia quarterly loss narrows, market fears low bids

ROME, May 15 (Reuters) - Italian airline Alitalia said on Tuesday its loss narrowed slightly in the first quarter due to fewer strikes but warned it could be forced to write down the value of its aircraft fleet.

The earnings report was released after Alitalia's shares touched a two-week low on concern that bids submitted in an auction for its privatisation were well below market price.

The government has shortlisted three bidders for its controlling stake in the airline after years of failed attempts by the state to turn Alitalia into a profitable company.

The airline's operating loss narrowed to 107 million euros in the quarter from 129 million a year earlier when labour strikes weighed more heavily on results.

Revenue rose more than 7 percent to 1.06 billion euros, helped by the inclusion of smaller airline Volare and with both passenger and cargo businesses showing growth.

With pre-tax profit of 147 million euros, the airline said its 2007 operating result could improve from a year earlier.

But Alitalia said it was analysing the accounting value of its fleet, and a writedown could force it to reduce results for 2006, when it reported an operating loss of 266 million euros.

A writedown could reignite concerns that the government will need to pump more money into the airline.

HEAVY TRADING

Alitalia's shares closed down 4.4 percent at 0.895 euros after a newspaper reported that the highest preliminary bid submitted for the airline was less than half its current market price. At one point shares dipped as much as 5.8 percent.

Without citing sources, the financial newspaper MF said Russian airline Aeroflot had offered less than 0.40 euros per share, while Italian carrier Air One had bid 0.10 euros per share.

A U.S. private equity consortium led by Texas Pacific Group [TPG.UL] had bid zero euros per share but had offered to buy the airline's 2002-2010 convertible bonds, it said.

The government has said that a buyer will be chosen on the basis of the plans to turn the airline around rather than on price.

On Monday, all three shortlisted bidders were admitted to the next round after an assessment of their preliminary offers.

Italian minister Antonio Di Pietro later said he had personally examined two of those three offers, describing them as "highly competitive but in need of improvement."

Alitalia also had to cancel some flights and delay others after its flight attendants began to "follow their contract to the letter," preventing them from working extra time.

"I would define it as a cold battle," said Cristina Ricci, an Alitalia cabin attendant who refused to work extra hours requested by the airline. "From today, we have stopped going out of our way to meet the needs of the company."

Dealing with Alitalia's notoriously tough labour unions will be a major challenge for a new buyer.

Alitalia Cargo announces new route to Miami
16 May 2007

MILAN, Italy (AP) - Alitalia Cargo announced Wednesday a new trans-Atlantic route from Milan to Miami that will also serve at least seven South American countries through an agreement with Centurion Air Cargo.

Alitalia Cargo will start weekly services to Miami on May 18, boosting to 10 its weekly flights to the United States, the company said in a statement.

The agreement with Centurion will allow Alitalia customers to reach key South American markets, including Venezuela, Ecuador, Brazil, Chile, Argentina and Peru, the company said.

"This agreement will allow us to reinforce our business, and project ourselves toward Central and South America," Alitalia Cargo Chief Executive Pierandrea Galli said in a statement. "Miami will become an important hub for handling goods, granting Italian entrepreneurs the ability to develop trade with key markets."

Alitalia Cargo operates a fleet of 5 MD11 Special Freighters. In addition to its North American routes, it serves India, China and Africa, and through agreements with Nippon Cargo and Korean Air, reaches Japan and South Korea.

Aeroflot seeks up to $1.2 bln for Alitalia - paper

MOSCOW, May 18 (Reuters) - Russian airline Aeroflot is seeking up to $1.2 billion in loans from western banks to fund its purchase of 39.9 percent of Italy's Alitalia , Russia's Vedomosti newspaper said on Friday.

It quoted Mikhail Poluboyarinov, the Russian flag carrier's finance director, as saying Aeroflot had sent letters to 20 foreign banks, including Deutsche Bank, Citigroup, Commerzbank, ABN AMRO, Credit Suisse, BNP Paribas, Calyon, Royal Bank of Scotland and Unicredit , Aeroflot's bidding partner.

Vedomosti quoted a source involved in the talks with banks as saying that it hoped to borrow 500-900 million euros ($676 million-$1.2 billion).

Poluboyarinov declined to name the amount but said it would be an unsecured, one-year loan and the airline expected answers from the banks by the end of May.

Apart from Aeroflot, the bidders for the Alitalia stake are a U.S. private equity consortium led by Texas Pacific Group and smaller Italian carrier Air One.

Alitalia cancels flights as cabin crew strike

ROME, May 20, 2007 (AFP) - Italy's Alitalia airline cancelled 14 flights Sunday from Rome's Fiumicino airport, including 11 to international destinations, because of a strike by cabin crew, a media report said.

Affected passengers were being found seats aboard other companies' aircraft, the Telenews agency, which specialises in airport-related news, reported.

Strike action by Alitalia cabin crew, following a breakdown in talks on a new labour contract, forced the company to cancel 19 flights Saturday from Rome airport.

Alitalia is expected to have to cancel 394 flights Tuesday, more than half of them to international destinations, because of a strike by air controllers over a pay dispute, the company announced Saturday.

Alitalia has been plagued by financial difficulties and the Italian government has announced the sale of its 49.9 percent stake in the company, scheduled for the end of July.

Strikes hit Alitalia as Italy looks for exit

ROME, May 22 (Reuters) - Twin strikes stranded thousands of Alitalia passengers on Tuesday as the Italian government said it was willing to quit the state-controlled airline entirely by selling its whole 49.9 percent stake.

Strikes by air traffic controllers and Alitalia cabin crew caused chaos affecting other airlines and requiring special measures to ensure up to 7,000 fans of soccer club AC Milan could travel to Wednesday's Champions League final in Athens.

The stoppages came as the Italian state sent a letter to its three shortlisted bidders for Alitalia, including a U.S. private equity group that is also gunning for Spain's Iberia.

It told them it wanted binding, cash offers for Alitalia by July 2. The Italian government said the bidder for a 39.9 percent stake could, if it wanted, buy the remaining 10 percent of the state's stake as well.

The idea could appeal to buyers looking to keep Alitalia free from political meddling, but unions said Italy should reconsider completely exiting the flag carrier.

"It would be better if the Treasury guarantees its presence in Alitalia," said Raffaele Bonanni, the leader of Italy's second largest trade union confederation, CISL.

Alitalia, Europe's fifth-largest airline, is losing over 1 million euros ($1.4 million) a day as strikes and high fuel costs weigh. It has not posted an operating profit since 1998, despite several restructuring efforts.

The Italian state has told bidders their turnaround plans for Alitalia were more important than the offer prices, and let employees know the government is ready to help ease the pain from any job cuts.

ANGRY SOCCER FANS

The bidders include Russia's Aeroflot and Alitalia's closest domestic rival, Air One. The third bidding consortium includes Texas Pacific Group, which is also bidding for Iberia.

Whoever buys Alitalia will inherit its notoriously strike-prone unions, who have already forced the airline to cancel hundreds of flights this month.

On Tuesday, a protest by cabin crews coincided with a air traffic controllers' strike in campaigns seeking better pay and conditions. Nearly 400 Alitalia flights were cancelled, or about half of the carrier's daily traffic.

The strikes had threatened to stop soccer fans travelling to Athens for the Champions League final against Liverpool, but civil aviation authorities said these flights had been "guaranteed" to avoid any threat of disturbances.

Meanwhile, the air traffic controllers' strike created travel headaches for others as well. German airline Deutsche Lufthansa expected major disruption to Italian flights and cancelled 42 return flights affecting thousands of passengers.

German budget carrier Air Berlin also expected to cancel some flights.

Some stranded travellers had less-than-noble gripes, including one man from Naples who complained his cancelled Brussels flight could expose his affair with another woman.

"My girlfriend thinks I am still in Belgium but I have come back to Italy because I have a lover here. She is expecting to meet me tonight," said the traveller, who asked not to be named.

"I don't know what I am going to do. This is what happens when you tell lies." (Additional reporting by Catherine Hornby in Frankfurt and Robin Pomeroy in Rome)

^^

That sucks. At least they have beautiful flight attendants.

Alitalia hits new turbulence with 'work-to-rule' action

ROME, May 25, 2007 (AFP) - Italy's struggling flagship airline Alitalia hit new turbulence Friday as cabin crews staged a "work-to-rule" action leading to several flight cancellations, according to a union spokesman.

The action came after the debt-ridden airline was forced to ground nearly 400 flights on Tuesday, when air traffic controllers were also on strike, sparking dozens more cancellations by other airlines.

"We don't know the exact numbers" of flights cancelled Friday as a result of sticking strictly to company rules regarding working hours and crew composition, union spokesman Francesco Staccioli told AFP.

A news agency specialising in airport affairs, Telenews, said some 20 flights were affected at Rome's Fiumicino airport, including flights to Paris and Moscow, while the rest were domestic flights between Rome and the northern city of Milan.

Alitalia cabin crew have staged a series of strikes since talks on a new labour contract broke down in April.

The Italian government, which wants to sell its 49.9 percent stake in Alitalia and has set a July 2 deadline for bids, has called a meeting with the airline's management and union leaders on Tuesday in a bid to resolve the dispute.

The Italian flagship lost some 380 million euros (490 million dollars) last year.

Lack of room for manoeuvre in restructuring the carrier in the face of strong unions ever prepared to stage crippling strikes is a major liability facing an eventual buyer, analysts believe.

Three main bidders have emerged, including Russian airline Aeroflot, a consortium of private equity groups and the owner of Italian airline Air One.

The cost of taking over Alitalia is estimated at about three billion euros, counting its current stock market capitalisation of 1.5 billion plus its debt of one billion and the cost of renewing its ageing fleet of 183 aircraft.

^^

That sucks. At least they have beautiful flight attendants.

lol...:D^^

I really hope that Texas Pacific Group will win the bid.:)

Alitalia auction stumbles as finale looms

ROME, June 18 (Reuters) - Alitalia's auction risks fizzling out altogether as it enters the final stretch, leaving the Italian government with the bleak prospect of pumping more cash into the unprofitable airline to keep it flying.

Put up for sale by Rome amid much fanfare six months ago in an effort to turn it around, Alitalia's auction initially attracted 11 bidders before the list was whittled down to three.

One of them has since pulled out, and on Monday speculation grew that Aeroflot might be the next to depart after it complained about the price tag. The Russian airline denies any plans to quit.

Analysts also question the wisdom of potentially selling Alitalia to a state-controlled airline such as Aeroflot when the aim has been to privatise it.

All of that would leave just one bidder in the fray -- smaller Italian carrier Air One, whose annual revenues barely match up to the annual losses of its larger rival.

The deadline to submit binding offers for Alitalia, worth about $1.3 billion on the market, is just two weeks away.

"I'm very doubtful about whether we'll get to the end of this," said Giacomo Chiorino, who heads fund management company Nuovi Investimenti Sim.

"I don't think we're going to sell our state airline to Russia. And (Air One) seem to have doubts themselves on buying something so big and with so many problems."

STARTED BADLY, ENDING WORSE?

Criticism of the auction from Italian politicians came thick and fast after Interfax on Monday cited sources saying that Aeroflot was pulling out, which the airline denied.

Italian senator Dino Tibaldi said the news was deeply worrying for the auction while another lawmaker said Rome should start from scratch with a new auction if Aeroflot did pull out.

"I hope that the government would have enough sense of reality to understand that, if ... the news of this morning is confirmed, it can't proceed as if nothing happened," Daniele Capezzone, who heads the parliamentary commission on productive activity, told ANSA.

Alitalia itself last week obliquely referred to what might happen if its auction failed, noting that it knew of no plans by any investors to shut the airline down in such a case.

But it said its operational continuity depended on the outcome of the sale.

As the auction sputters along, the airline's woes have multiplied. It keeps posting losses and it wrote down the value of its fleet last month, triggering the need for a capital increase under Italian law.

If Alitalia is not able to find a buyer, then the Italian government may end up having to foot the bill once again for the airline's next cash injection, said Chiorino.

"If the auction doesn't go to the end, it's going to be a huge problem because the government doesn't seem to be ready to intervene once again," he said. "Public opinion is against them... Most people in Italy are against the state putting more money into it."

And through it all, Alitalia's unions have staged crippling strikes and there was more criticism on the auction from one union chief on Monday.

"Alitalia's privatisation started badly and is ending in the worst fashion," said Claudio Genovesi, head of the powerful Fit-Cisl union. "The government has to assume the responsibility of direct negotiations as was done by the respective governments of Air France and KLM to safeguard their sector."

FACTBOX-Alitalia's spluttering bid process

June 18 (Reuters) - Italy's sale of airline Alitalia looks increasingly fragile after Russian suitor Aeroflot said on Monday a purchase would depend on price, although denying a report from Interfax that it was actually pulling out.

The treasury, which is being advised by Merrill Lynch and Bain on the sale, asked Credit Suisse last week to make an independent valuation of the airline -- worth about 1.06 billion euros ($1.4 billion) on the market -- and told management to put together plans for the next three years.

That has led to speculation the auction might fail, given the choice of bidders is now between Air One, a domestic airline whose revenues scarcely match Alitalia's losses, and another state-owned airline.

Following are details of the bid process, Alitalia and its suitors, who must submit binding offers by July 2:

THE BID PROCESS

The government announced it was putting its stake in Alitalia up for sale in late December, 2006.

Rome owns 49.9 percent of the flagship carrier and is seeking bids for at least 39.9 percent, which would automatically trigger a full bid under Italian takeover law. It has said it is willing to sell the entire stake if a bidder wants it.

There were 11 bidders initially but those shrank to three approved to submit binding offers.

Private equity firms TPG [TPG.UL] and MatlinPatterson pulled out at the end of May citing difficulties with the rules.

TPG has bid instead with British Airways for Iberia , valuing the Spanish carrier at 3.4 billion euros.

ALITALIA

Italy's national carrier has lost nearly a quarter of its value since the government announced its privatisation on Dec. 29, 2006, and its market worth now barely exceeds its debt, which was 995 million euros at the end of March.

The airline has posted an annual operating loss every year since 1999 and in the first quarter of 2007 lost 91 million euros -- around a million euros a day.

It had to write down the value of its fleet by 197 million euros, and this pushed losses in 2006 to 626 million euros -- almost certainly forcing it to launch a capital increase to rebalance the books under Italian law.

Shareholders meet on June 26 to discuss its cash requirements.

The 60-year-old airline serves 25 domestic airports and 85 in the rest of the world and carried 24 million passengers in 2005. It has a fleet of about 181 aircraft.

Its hubs are at Fiumicino in Rome and Malpensa for Milan. The busy route linking the heart of Italy's politics with the business capital is particularly lucrative and a key attraction for any bidder.

Since 2001, Alitalia has been part of the SkyTeam alliance with Air France KLM , Aeroflot, AeroMexico, Continental , CSA Czech Airlines, Delta , Korean and Northwest .

It has about 20,000 employees including its air cargo services, of which 6,800 are flight crew.

AEROFLOT [AFLT.MM]

Russia's flag carrier and its affiliates carried around 7.3 million people last year, or almost every fourth passenger in Russia.

The company flies 90 planes to 47 countries and controls half of Russia's international flights and 12 percent of its domestic market.

The company has a market capitalisation of over $2.8 billion and posted a 36 percent rise in net profit to $258.1 million last year.

It is bidding with UniCredit , which vies with Intesa Sanpaolo to be Italy's largest bank by market size.

AIR ONE

AP Holding is bidding as the vehicle for Carlo Toto, the head of Air One, Alitalia's closest domestic rival, with the backing of Intesa Sanpaolo -- Italy's biggest retail bank.

Air One had over 33 percent of the domestic market in 2006 and carried over 6.3 million passengers. It has a code-sharing agreement with Germany's Lufthansa , which has denied having any interest in Alitalia's sale.

Air One was born in 1995 from Aliadriatica, a training and taxi service company, with domestic flights from Milan. The same year, it started scheduled flights between Rome and Milan -- the first competitor to Alitalia on Europe's fifth-busiest route.

It employs roughly 2,800 people and serves 23 Italian destinations and nine major international cities.

It had revenues of 611.5 million euros in 2006. It aims to have a fleet of 56 aircraft by the end of this year.

(Sources: Reuters data, company Web sites)

TPG was the only good bidder. The fact that they retired from the bid shows what are Alitalia's odds to survive in the future...

Is Alitalia going to turn into Italy's Swiss Air? Eventually having to be broken as an independent airline and returning to life of a subsidiary of a larger European carrier (i.e., Swissair now being a subsidiary of Lufthansa)?

:?

It's too early to say... what is probably gonna happen though now is that nobody will buy Alitalia because the government wants too much money and the company has too much debt and half the fleet is very old
This can lead to only two things:

1) a new bid with less restriction and a lower price for Alitalia

2) the Italian government keeps the company and refunds it like it has been doing for the last 20 years:bash: This is illegal because of EU restrictions but it's Italy and it wouldn't be the first time something like this happens...

1) a new bid with less restriction


I meant a new auction...

byebye TPG ?
byebye Alitalia...

Italian Treasury extends Alitalia bid deadline to July 12
21 June 2007

ROME (AP) - The Italian government announced Thursday that it has extended by 10 days the deadline for final bids to acquire a controlling stake in Alitalia, exposing a difficult bidding period for the struggling airline.

The government, which is seeking a private investor to buy at least a 39.9 percent stake in Alitalia but is prepared to sell its entire 49.9 percent stake, set a new deadline of July 12.

It did not give a reason in the statement.

Bidding has been beset by concern over a lack of data and shifting guidelines and confused by exits and entries.

The U.S. asset management group Matlin Patterson Global Advisors LLC rejoined the bidding process this week, after a consortium it belonged to dropped out, saying it could not comply with all of the requirements. Meanwhile, Russian media reports have suggested that another bidder, the Russian airline Aeroflot, had pulled out because the asking price was too high.

Officially, three bidders remain: Matlin Patterson; AP Holding SpA, the parent company of Italy's second-largest carrier Air One, backed by Intesa Sanpaolo SpA; and OAO Aeroflot-Russian Airlines, backed by Italian bank UniCredit SpA.

The Economics Ministry said in a statement that other conditions remain unchanged. Under the latest terms, bidders must guarantee that Alitalia retains an Italian identity for at least eight years.

Alitalia's efforts to turn itself around have been hampered by repeated strikes, high fuel costs and competition from low-cost carriers. Earlier this month, the airline reported a first-quarter net loss of 135 million euros ($180 million), compared with a loss of 159 million euros in the same period last year.

Alitalia shares rose nearly 3.3 percent to 0.85 euros ($1.14) Thursday in Milan.

Italy doubtful on Alitalia bidder, has no 'Plan B'

ROME, July 4 (Reuters) - Rome is sceptical over the interest of one of the two bidders left in the auction of Alitalia but is not looking at alternative plans to salvage the airline, Italy's transport minister said on Wednesday.

His comments come as the withdrawal of various potential suitors, most recently Russian airline Aeroflot, leaves Alitalia's auction on the verge of collapse and speculation grows about what Rome might do should the tender fail.

"We are not in the least thinking of alternative options," Alessandro Bianchi, Italy's transport minister, told reporters. "We are focused on 'Plan A'".

But he said he was sceptical on the commitment of U.S. buyout fund MatlinPatterson, which re-entered the auction last month though few see it as a real contender to buy the airline.

"They don't seem to have given big signs of life (in the auction,)" Bianchi said.

Italian media have speculated that the buyout fund would eventually follow Russian carrier Aeroflot's footsteps and depart from the auction, and that it was unlikely to make a binding offer for the airline.

Binding offers are due on July 12.

With just small Italian carrier Air One left in apart from MatlinPatterson, Italian newspaper Il Sole 24 Ore on Wednesday reported that Rome was studying alternatives should the auction collapse.

The government could shut down Alitalia or reopen talks with the airline's long-time partner Air France , which has repeatedly said it has no interest in bidding unless Alitalia turns itself around, the newspaper reported.

Italian Treasury extends Alitalia bid deadline for 2nd time, to July 23
6 July 2007

ROME (AP) - The Italian government announced Friday it has extended to July 23 the deadline for final bids to acquire a controlling stake in Alitalia, the second such delay in the difficult bidding process for the struggling airline.

The deadline, previously set for July 12, was extended so that bidders can review new information concerning Alitalia, the Economics Ministry said in a statement.

The government, which is seeking a private investor to buy at least a 39.9 percent stake in Alitalia but is prepared to sell its entire 49.9 percent stake, last month approved an extension of the deadline originally set for July 2.

The bidding process, beset by concerns about a lack of data and shifting guidelines, has been confused by exits and entries.

Last week, Russian flag carrier Aeroflot withdrew from the bidding, saying it had not been provided with critical information.

Previously, the U.S. asset management group Matlin Patterson Global Advisors LLC rejoined the process after a consortium to which it had belonged dropped out, saying it could not comply with all the requirements. The only other official bidder remaining is AP Holding SpA, the parent company of Italy's second-largest carrier Air One, backed by Italian bank Intesa Sanpaolo SpA.

In a statement, the Economics Ministry said that other conditions for the final bids remain unchanged. Under the latest terms, bidders must guarantee that Alitalia retains an Italian identity for at least eight years.

Alitalia's efforts to turn itself around have been hurt by repeated strikes, high fuel costs and competition from low-cost carriers. In June, the airline reported a first-quarter net loss of euro135 million (US$180 million), compared with a loss of euro159 million in the same period last year.

I'd hate to see Alitalia go. It's one of the best airlines of been on. Well I'm judging from one round trip flight from Rome to Catania but I loved every minute of each leg. The staff was very friendly to me.

Last bidder in Alitalia race drops out, Italian government calls off auction
18 July 2007

ROME (AP) - The auction for the sale of Alitalia was called off Wednesday after the last official bidder dropped out of the race for the struggling national carrier, the Italian Economics Ministry said.

U.S. asset management group Matlin Patterson Global Advisers LLC will not present a binding offer by Monday's deadline, the ministry said in a statement declaring the sale process closed.

The statement came a day after the front-runner in the race, Italy's second largest airline, Air One, dropped out saying the government's conditions for the sale would not allow it to carry out its turnaround plan for Alitalia.

Few had expected the U.S. company to make a final bid, and the ministry said it had not yet decided what to do with its 49.9 percent stake in the loss-making airline.

"Any further decisions on the stake held in Alitalia will be communicated to the market, as soon as they are made," the statement said.

As Premier Romano Prodi's Cabinet faced the embarrassing collapse of its bid to privatize Alitalia, the transport minister suggested earlier Wednesday that the government might look to have private talks with interested parties.

But Alitalia faced more trouble during the day, with a daylong strike by its flight attendants and its shares closing down 3.53 percent at euro0.775 (US$1.07) on the Milan stock exchange.

"We are already reflecting on what do in the future. There are various options on the table," Prodi said, speaking during a visit to Bratislava, Slovakia. He did not elaborate.

Alitalia later said in a statement it had called a board meeting for Friday to take "appropriate actions" in light of the latest development. The statement gave no specifics.

The withdrawal from the race Tuesday by AP Holding, Air One's parent company, virtually ended the sale process as the Italian airline had been widely seen as the next Alitalia owner. It left Prodi's government with the difficult job of keeping Alitalia flying as it loses about euro2 million (US$2.75 million) a day.

The government has come under criticism amid accusations that conditions it set for the sale were too restrictive. The conservative opposition called on the Cabinet to discuss its plans in parliament.

"It would seem peculiar to launch a new race. I see the road of negotiations with those who might show or have shown an interest as an easier way," Transport Minister Alessandro Bianchi said. He added, however, that nothing had been decided yet.

AP Holding has said that it would be prepared to reconsider the possibility of a move for Alitalia should terms and conditions be changed.

The government is seeking a private investor to buy at least a 39.9 percent stake in Alitalia, but is prepared to sell its entire share. But the process has been beset by concerns about a lack of data and shifting guidelines and confused by exits and entries.

Matlin Patterson had rejoined the bidding after a consortium it belonged to with U.S. private equity company Texas Pacific Group and Mediobanca dropped out in May.

After TPG's exit, Russian carrier OAO Aeroflot Russian Airlines also withdrew from the race.

TPG pulled out on the grounds that the sale process rules were too complex and did not give it sufficient flexibility, while Aeroflot said it had not "had access to critical information" to enable it to put forward a business proposal. In recent weeks, the Treasury had sought to encourage TPG to come back into the auction, but the private equity company did not change its position.

Under the terms of the competition, the buyer would have to shoulder Alitalia's debt, which totaled more than euro1 billion (US$1.3 billion) as of December, and bidders must guarantee that Alitalia retains an Italian identity for at least eight years.

Alitalia's efforts to turn itself around have been hurt by repeated strikes, high fuel costs and competition from low-cost carriers. The latest strike by flight attendants -- accompanied by a wider protest of air travel workers -- was expected to snarl air travel.

Unions said that more than 150 flights were canceled as a result of the protest, while Alitalia declined to give a figure while the strike was still ongoing.

Back to the drawing board....

Italy decision on Alitalia sale days away

ROME, July 27 (Reuters) - Rome will announce in a few days its next move on Alitalia, the transport minister said on Friday, as the Italian government came under growing pressure to find a quick solution to salvage the money-losing airline.

Rome has been dithering on its dwindling options to salvage Alitalia after its seven-month auction collapsed last week under a barrage of criticism from unions and the opposition.

Economy Minister Tommaso Padoa-Schioppa on Thursday said Rome was still debating whether to launch a new auction from scratch with fewer terms or begin private talks with suitors -- immediately drawing attacks from opposition lawmakers for dragging his feet on the matter.

Padoa-Schioppa distributed a document repeating his comments from Thursday to a cabinet meeting, ministers said, but they did not get around to discussing the issue.

Transport Minister Alessandro Bianchi soon after said the government's next step on Alitalia -- worth around 1 billion euros but with a suggested price tag from one minister of a token 1 euro -- was only a matter of days away.

Rome is still pondering whether the company's management, Treasury officials or an investment bank should manage the next phase of the sale process, a government source told Reuters.

If Rome entrusts the next step to Alitalia's management, then that could herald the naming of a new chief executive to steer the company during the sale, the source said.

The airline, which is working on a new industrial plan to guide it in coming months, is run by Chairman Berardino Libonati at present.

Alitalia shares closed up nearly 4 percent on Friday.

Lufthansa would look at Alitalia if conditions change

FRANKFURT, July 26 (Reuters) - Germany's Deutsche Lufthansa would look at Alitalia if the conditions of the sale of the Italian carrier changed dramatically, finance chief Stephan Gemkow told reporters on Thursday.

"Anything can happen (in the sale process), so I can't make a commitment at all. In the process so far, the conditions and requirements were not suitable for a participation by Lufthansa," Gemkow said.

"If the conditions there change in some dramatic fashion, then of course we will look at it. But that is really pure speculation at this point in time."

Any takeover bid would need political goodwill as well as a signal that risks such as the influence of the unions in Italy could be overcome, he added.

^^

It seems like Lufthansa owns alot of Italy. They've already got Air One and Air Dolomiti.

I just got my MilleMiglia card in the mail last week so hopefully I'll be able to use it for many years to come. I wonder how many Texans have a MilleMiglia card. :)

^^Some European newspapers say than British Airways wants to buy Alitalia...
:sly:

Alitalia names new chairman, postpones approval of new business plan
1 August 2007

ROME (AP) - Alitalia replaced its chairman Wednesday after his resignation a day earlier, but it postponed a new and long-awaited business plan for the troubled airline.

Maurizio Prato, a former senior executive at state-controlled aerospace and defense company Finmeccanica SpA, replaces Berardino Libonati, who stepped down after less than six months on the job.

Alitalia shares fell more than 7 percent Wednesday following Libonati's resignation, which followed a failure by the Italian government to auction off the nation's flagship carrier.

Alitalia has been without a chief executive since Libonati took over in February from Chairman and CEO Giancarlo Cimoli.

Libonati, a former telecom executive, accepted the post in view of the possible sale of the airline, but after the collapse of the seven-month auction process he said "managerial abilities and a knowledge of the sector" were now needed for the job, Alitalia said in a statement late Tuesday.

Prato's appointment had been expected. The Economics Ministry, Alitalia's main shareholder, said Tuesday that it would back him as the new chairman and that it hoped Prato would quickly find a buyer.

Alitalia said it has delayed approval of the business plan until Aug. 30 to give Prato time to look at the carrier's strategic options. The board had already postponed the decision in a meeting last month.

The Italian government is seeking a private investor to buy at least a 39.9 percent stake in Alitalia, but is prepared to sell its entire 49.9 percent stake. Shares in Alitalia closed down 7.43 percent at 0.82 euros ($1.12) on the Milan stock exchange following Wednesday's board meeting.

The government was forced to call off the auction on July 18 after all bidders had dropped out, with many citing restrictive conditions and shifting guidelines. The bidders included Air One, Italy's second-most traveled carrier; Texas Pacific Group Inc., the private equity house, and Russia's OAO Aeroflot Russian Airlines.

Hurt by frequent strikes and competition from low-cost carriers, Alitalia loses between $1.4 million and $2.8 million a day.

New Italian-led group says wants to buy Alitalia

ROME, Aug 10 (Reuters) - A largely Italian consortium of financiers and entrepreneurs has expressed interest in buying ailing Italian airline Alitalia , which is struggling to find a buyer, the group's lawyer said on Friday.

The previously unknown group joins a handful of companies who say they could consider buying the loss-making airline, though the Italian government's attempt to sell it through an auction failed last month when all bidders pulled out.

Rome, which has a 49.9 percent stake in the airline, says it still wants to shed the stake but has handed responsibility for finding a buyer to Alitalia's management -- and it is unclear who, if anyone, is in the lead to buy it this time around.

The new group has more than five Italian and foreign members that represent both financial and corporate interests, said its lawyer Antonio Baldassarre, a former chairman of Italy's constitutional court.

He declined to identify the members, but said none of them had participated in the auction that collapsed.

"Financing is not a problem," Baldassarre said, adding that banks had stakes in the group's financial participants.

But the group's emergence on the scene failed to prevent shares in Alitalia, worth about $1.5 billion on the market, from dipping 0.7 percent amid a broadly lower market.

The group has presented its interest to the Italian Treasury, but has yet to do so directly with the airline, he said.

It does not plan to cut jobs and would keep Alitalia's management Italian and widen its flight network, he said. That contrasts with the view of most industry analysts and experts, who say Alitalia needs a sharp restructuring with layoffs if it is to become profitable again.

AUCTION CALLED OFF

Italy last month called off its seven-month auction of the national airline after bidders pulled out citing restrictive conditions imposed on the sale, throwing the future of the airline into doubt.

Alitalia's newly appointed chairman Maurizio Prato is expected to meet representatives of rival airlines like Lufthansa and Air France-KLM in coming days to discuss whether they are interested in buying the airline, Italian media say.

Air France-KLM, once considered the Italian carrier's most likely buyer, has repeatedly denied any interest in rescuing it now but on Thursday said it would listen if approached.

Lufthansa said last month it would be prepared to look at Alitalia if the conditions of a sale changed.

All the final contenders in the failed auction -- Russian airline Aeroflot, U.S. private equity firms MatlinPatterson and TPG and smaller Italian carrier Air One -- say they would be interested again if Italy relaxed the terms of the sale.

Alitalia privatisation attracts new interest

ROME, Aug 21, 2007 (AFP) - A group of investors led by Italy's former constitutional court president Antonio Baldassarre is interested in acquiring Alitalia which has been put up for privatisation, the airline said Tuesday.

Baldassarre called the airline on behalf of the group to express an interest, Alitalia said, adding that Italian stock exchange rules required it to publish a statement.

The group had asked for a meeting with Alitalia management which was to take place in late August or early September, it said.

Baldassarre, a lawyer, is also a former president of Italian broadcaster RAI. He declined on Tuesday to identify the investors he represents.

An earlier attempt at privatising Alitalia came to nothing last month when Italian airline Air One, owned by businessman Carlo Toto, announced it would not bid for the state's 49.9-percent stake in the carrier.

Alitalia has been in financial trouble for several years, posting a net loss of 626 million euros (863 million dollars) in 2006. It had a first-quarter loss this year of 135 million euros.

Friday August 24, 9:31 PM
TPG still interested in Alitalia: source

ROME (Reuters) - U.S. private equity firm TPG is still interested in bidding for loss-making airline Alitalia and is waiting to see what conditions management would put on the sale, a source close to TPG said on Friday.

The source, denying a newspaper report, also said TPG's interest in Alitalia was "not incompatible" with its interest in acquiring Spanish airline Iberia .

TPG is leading a group of potential Iberia bidders, which also include British Airways and some Spanish firms.

Italy's government in July had to call off its seven-month auction for Alitalia -- worth about 1.2 billion euros ($1.6 billion) -- after all bidders pulled out citing restrictive conditions.

The Italian state, which is trying to shed its 49.9 percent controlling stake, has since handed responsibility for finding a buyer to Alitalia's new management.

All of the final contenders in the failed auction -- including Russian airline Aeroflot , U.S. private equity firm MatlinPatterson and smaller Italian carrier Air One -- have said they could be interested again if Italy relaxed the terms of the sale.

Alitalia said this week it had been contacted by another group of investors which expressed an interest in the carrier.

TPG in the past has told the Italian government it wants the freedom to talk to Alitalia's strike-prone unions before making a binding offer, among other changes to the sale process, people familiar with the situation have said.

Alitalia shares were down 0.2 percent in late afternoon trading, compared with a 0.2 percent rise in the overall Milan market .

Alitalia plan for Milan hub comes under fire

MILAN, Aug 31 (Reuters) - Politicians from all sides in Italy's northern industrial heartland have voiced fierce opposition to any cut in Alitalia's presence at Milan's Malpensa airport under its "survival" plan.

Calling the Malpensa retreat a "political attack" by Rome -- which had tried to sell the airline -- opposition party member and Lombardy Governor Roberto Formigoni said on Friday Italy's richest region could turn to the European Union to have the move blocked.

"The obstinacy of this decision confirms Alitalia's comatose state. It's the 15th industrial plan in seven years. The previous ones all failed," Formigoni said in an interview with La Repubblica newspaper.

Under the rescue plan approved by Alitalia's board late on Thursday, Alitalia will seek a cash infusion, slash unprofitable flights, cut jobs and scale back its reliance on the two hubs as part of its "survival" programme.

Local leaders have long feared Alitalia could abandon Malpensa, about 40 km (25 miles) northwest of Milan, as a hub in favour of Rome's Fiumicino as it struggles to stay alive.

They have long complained about what they claim is Rome's lumbering bureaucracy and bad management of public finances.

One member of the Northern League, which in the past has taken a secessionist stance, said slashing Malpensa's role was Rome-centric.

"The north is not going to pay a higher price yet again ... just for political choices which favour the capital," said Andrea Gibelli, adding it was a call to arms for Lombardy.

Milan's provincial chairman Filippo Penati, who is also a member of the Democrats of the Left, said cutting back on Malpensa would hit "the whole business and transport system of the north," which should not have to pay for "years of inefficiency at Alitalia".

Alitalia's plan said only that it would reorganise activities at Malpensa and increase its presence at its Rome hub and it was impossible to operate efficiently with two hubs.

An EU official said Alitalia's decision to move flights from one airport to another had nothing to do with EU rules.

Giuseppe Bonomi, chairman of SEA Aeroporti Milano which runs Malpensa and a former Alitalia chairman, said international carriers were ready to take Alitalia's place at Malpensa.

KEEP 'EM FLYING

The management aims to keep Alitalia flying while it hunts for a buyer for the 49.9 percent stake owned by the Italian Treasury. An auction for that stake collapsed in July.

The board is to meet again on Sept. 7 to give more details.

Alitalia said on Friday its short-term liquidity slid to 592 million euros at the end of July from 612 million euros at the end of June.

SEA said it hoped a new industrial partner "will guarantee as soon as possible a strategy rethink ... which follows market logic."

Milan Mayor Letizia Moratti, who like Formigoni is from the rightist opposition party Forza Italia, said the decision on Malpensa was "contrary to every logic of the market", given the steady rise in Alitalia passengers at the airport.

Shares in Alitalia ended down 1.3 percent at 0.836 euros.

Alitalia aims to find buyer by year end - report

MILAN, Sept 8 (Reuters) - Alitalia aims to find a buyer for the government's 49.9 percent stake in the troubled carrier by the end of the year, Chairman Maurizio Prato told daily Il Sole 24 Ore in an interview published on Saturday.

An auction for the government's stake collapsed in July after the last bidders pulled out.

The carrier will now contact all those who expressed an interest in the auction, as well as competitors such as Air France , British Airways , Lufthansa , unspecified Asian carriers "and all those who will show an interest," Prato told the paper.

Alitalia has enough cash to survive 12 months, Prato said.

The chairman was present at Pope Benedict's departure to Austria on Friday, Prato said.

"I asked the Holy Father a special blessing for this poor airline. He consented and smiled."

Alitalia was not immediately available for comment.

Alitalia boss wants state sell-off finalised by Christmas

ROME, Sept 8, 2007 (AFP) - The boss of Italy's troubled Alitalia carrier wants to see the airline's state holding sold off by the end of the year, he said in an interview published Saturday.

Maurizio Prato, who was appointed by the government in August to find a buyer for Alitalia as soon as possible following the failure of an earlier bid, told the financial daily Il Sole-24 Ore, "I want to get back to my own business by Christmas."

Prato is also head of Fintecna, a public group which holds 51 percent of Alitalia's ground-handling company AZ Servizi.

He confirmed there had been "exploratory contacts" with companies that had earlier expressed an interest in taking on Alitalia, including British Airways, Lufthansa and Air France, as well as Asian firms.

On Wednesday Air France-KLM chief executive Jean Cyril Spinetta said he would "listen attentively" if talks were sought with Alitalia.

He said that Alitalia's new restructuring plan, which includes moves to launch another capital increase and cut an unspecified number of jobs, was "suitable."

Alitalia plans to issue new shares in order to dilute the Italian state's 49.9 percent stake. Press reports have said this capital increase could total as much as 1.5 billion euros (2.04 billion dollars).

The restructuring programme also includes a plan to downsize operations at Milan's Malpensa airport, but some sector analysts have warned that this may put off potential buyers.

Alitalia and Air France-KLM are already linked by cross ownership stakes of two percent each.

In response to Alitalia plans to 'leave' Milano Malpensa


RYANAIR LAUNCHES MANIFESTO FOR MALPENSA

$1BN INVESTMENT, OVER 80 NEW ROUTES FROM MALPENSA & BERGAMO

Ryanair, Europe’s largest low fares airline today (13th Sept) launched its own ‘Manifesto for Malpensa’ in response to Alitalia’s plan to cut half of its 340 daily flights from the airport. As Lombardy’s largest low fares airline, Ryanair is determined that the people of Lombardy should remain connected to the rest of Italy and Europe despite Alitalia’s plans to abandon the region.

Ryanair has demonstrated the ability of its low fares to deliver rapid growth at hundreds of European airports and in less than ten years has developed a network of 144 routes to/from 22 Italian airports. Despite this unprecedented growth, the number of passengers enjoying low fare flights in Lombardy remains massively underdeveloped, and by working with Orio al Serio to the east of Milan and Malpensa to the west of Milan, Ryanair’s Manifesto for Malpensa would remove this inequity.

In the greater metropolitan area of London (pop. 7 m) for example, 18 m passengers annually enjoy Ryanair’s low fares at 3 London airports yet in Milan which has the same greater metropolitan population of 7m inhabitants, this number is 6 times lower. There is clearly room for growth to both the east and the west of Milan and Ryanair’s manifesto for Malpensa would ensure that Lombardy realises its true potential once passengers have an alternative to the excessively high fares charged by Alitalia.

In return for a business plan which focuses on delivering a simple, efficient, low cost operation at Malpensa Airport, Ryanair is committed to developing in Lombardy by investing over $1bn between 2008 to 2012 as follows:

1) More than double the size of its existing Bergamo base (currently 4 aircraft and 39 routes) by investing $420m in 6 additional aircraft before 2012.

2) Invest $840m in Malpensa, basing 12 aircraft at the airport, starting with 5 in 2008, a further 4 in 2009 and 3 in 2010.

3) Open 50 international routes from Malpensa bringing real low fare connections to all of Europe’s major destinations.

4) Open 10 domestic low fare domestic routes connecting Milan to the islands, centre and south of the country.

5) Guarantee the lowest fares of any airline flying from any Milan airport to any of the destinations served.

Speaking today, Ryanair’s Head of Communications, Peter Sherrard said:

“For too long Alitalia’s high fares have limited growth in Malpensa and the Milan area. In order for the airport and the region to prosper, Malpensa needs to attract those airlines which are capable of delivering growth, and no airline can match Ryanair’s unrivalled ability to deliver this because of the infinitely broader appeal of low fares compared to the narrow appeal of Alitalia’s high fares. We look forward to meeting with SEA tomorrow to discuss our offer to deliver growth by investing over $1bn in Malpensa and Orio al Serio. Ryanair’s ‘Manifesto for Malpensa’ can unlock the true potential of the region thanks to the proven ability of our guaranteed lowest fares to deliver record growth for tourism and business. Ryanair’s offer to SEA provides the potential for real growth, what happens now is in SEA’s hands.”

Troubled Alitalia cannot sustain 2 hubs -Italy min

MILAN, Sept 16 (Reuters) - Troubled carrier Alitalia cannot sustain two hubs in its current state, Italy's industry minister told a newspaper on Sunday, as the airline plans to nearly halve routes at Milan's Malpensa airport as part of a survival plan.

Minister Pierluigi Bersani added in comments to Italian newspaper Il Messaggero: "The development of Malpensa cannot be entrusted to a company which risks bankruptcy."

Alitalia could cut 150 flights at Malpensa -- around half its total there -- a union source has said, as part of a survival plan drawn up after no one wanted to buy the airline.

Low-cost carrier Ryanair this week stepped into Alitalia's backyard saying it was ready to launch 80 routes to Milan airports Orio al Serio, where it already operates, and Malpensa, a new departure, with planes worth more than $1 billion from its fleet.

"Alitalia, now more than ever in its current state, cannot sustain two hubs," Bersani said.

Regional Affairs Minister Linda Lanzillotta also stepped into the debate on the planned scaleback with remarks in Corriere della Sera's Sunday edition.

"The Alitalia crisis is inevitably linked with the role of Malpensa, which must be protected and developed," Lanzillotta told the newspaper.

"Malpensa has the right to be developed, and it seems to me Ryanair's offer goes in that direction. One certainly cannot make Alitalia act against market logic ... It has already done so long enough, and the consequences are in front of everyone's eyes."

The planned Malpensa revamp has come under fire in Italy's north. Milan Mayor Letizia Moratti and Lombardy Governor Roberto Formigoni are to meet officials in Rome on Friday, Corriere della Sera said, adding the topic was likely to come up.

Transport Minister Alessandro Bianchi said on Saturday the ministry is to hold a Monday meeting to discuss Alitalia slots at Malpensa, adding it would be "silly" not to consider Ryanair's offer.

State-controlled Alitalia announced a survival plan in August that included scaling back its presence at Malpensa, after an attempt by the government to sell the airline flopped in July. Management must now find a buyer.

Alitalia, which has hubs at Malpensa and Rome's Fiumicino, reported a slightly smaller first-half loss on Wednesday but warned that results would fall short of forecasts.

I'm planing a new trip to South America and Alitalia has a good offer but I'm a bit confused because I don't know if this airline will still flying.

So has anyone news about alitalia? I'd like also some opinion about the service of this airline.

Do not worry, Alitalia is working and it provides a good service.
;)

Alitalia is still flying. Here is the thread about its restructuring :
http://www.skyscrapercity.com/showthread.php?t=134146

I loved my two flights I had with Alitalia. Last I heard they were planning to order 50 A380's, 100 787-10's and 200 Boeing 717's, then my alarm woke me up from that dream.

if the company gets bought out, they might do something like that to restructure the company (buy more aircraft), it needs it

Air One owner to talk takeover with Alitalia boss

ROME, Sept 19 (Reuters) - Carlo Toto, owner of Italian airline Air One, said on Wednesday he will meet Alitalia Chairman Maurizio Prato to discuss the possibility of buying the state's stake in the flag carrier.

"We have been invited to an initial meeting, after that Prato will set out the timetable (for further meetings)," Toto told reporters in Rome, adding that the initial meeting would happen "within the week".

Air One was one of three bidders for the state's 49.9 percent stake in Alitalia earlier this year. The auction collapsed when all bidders pulled out among concerns about the terms the government wanted to impose on a buyer.

Toto said he was still interested, saying a merger between Alitalia and Air One "would allow the new Alitalia to to take on international and intercontinental markets with great success".

Alitalia's chairman will report to the airline's board by late September or early October about the search for a buyer for the government's 49 percent stake, according to a local government official who met him earlier on Wednesday.

"Prato said that between the end of September and the first few days of October he will report to the board about the search for a buyer for Alitalia," said Roberto Formigoni, the governor of Lombardy region of which Milan is the capital.

Alitalia plans to halve its flights at Milan Malpensa airport, a move that has concerned local politicians and the company that operates the airport.

After a meeting with Alitalia Chairman Maurizio Prato, Governor Formigoni said the airline would not oppose the transfer of takeoff and landing slots at Malpensa.

Air France-KLM wants to buy Alitalia via share swap: report

MILAN, Sept 20, 2007 (AFP) - The Air France-KLM group wants to acquire Italian airline Alitalia via a share swap, the daily La Stampa said on Thursday, citing a working document addressed to the Italian government and the company.

Separately the daily Il Sole 24 Ore said, without giving a source, that German airline Lufthansa was also interested in buying Alitalia, which the Italian government is seeking to sell.

A spokeswoman for Air France, which is considered the favourite to buy Alitalia, declined to confirm the details of the La Stampa report.

According to the document quoted by La Stampa, Air France-KLM's plan is based on a rescue plan that Alitalia chairman Maurizio Prato has drawn up. The plan foresees concentrating the airline's activities at Rome airport to the detriment of Milan.

La Stampa said the Air France proposal had received a mixed reception within the government.

Prato was charged with finding a buyer for Alitalia after the previous privatisation process fell apart when all the bidders withdrew.

The chairman of Alitalia has started a series of talks with the main airlines interested, as well as with the fund TPG.

Air France-KLM have a two percent cross shareholding and are partners within the Sky Team Alliance.

It boggles my mind why Alitalia chose Rome as its hub and not Milan. Milan is by far the economic powerhouse of Italy, there are 3 times as many people living in a 50-100km circle around Milan than there are in the same circle around Rome and so on.

Yet another terrible decision by Alitalia...they are really digging their own grave.

"Comatose" Alitalia can't repay debt -chairman

ROME, Sept 25 (Reuters) - Alitalia is in a "comatose" state and cannot repay loans and bonds due in the next three years, its chairman said on Tuesday, raising new doubts about the airline's survival unless it can find a buyer.

In a hearing at a Senate committee, Maurizio Prato forecast 2007 losses "a little bit under" 400 million euros ($563.1 million), net of extraordinary items, and said the carrier needed a "strong alliance" to turn its fortunes around.

Alitalia has been searching for a suitor since an auction for the Italian state's controlling stake collapsed in July.

"Alitalia is in a comatose state, it's on life support and I am very surprised by the almost general state of denial," said Prato, who was appointed last month.

He said the company, in its current situation, did not have enough money to repay 320 million euros ($450.5 million) of loans in the next two years or 714 million euros ($1.01 billion) worth of bonds due in 2010. Alitalia posted a first-half net loss of 211 million euros. Its full-year 2006 loss reached 626 million euros after the carrier wrote down the value of its fleet by more than 197 million euros.

Since the flop of the auction for Rome's 49.9 percent stake in the airline, Alitalia has had initial meetings with potential suitors and unveiled a new three-year survival plan to keep it afloat while the search for a buyer continues.

Prato said he would report back to the board on the search in the first 10 days of October. The process would reach a more decisive second phase by mid-November, he said.

No clear front-runners have emerged so far, although small domestic rival Air One has expressed interest and had a meeting with Alitalia's sale adviser last week.

Russia's Aeroflot, another one of the three parties shortlisted in the failed auction, denied an Italian news agency report that it was still in the bidding. "Aeroflot is not considering buying Alitalia," Deputy General Director Lev Koshlyakov told Reuters.

Italian media say long-time commercial partner Air France-KLM could step in after snubbing the failed auction. The head of Air France KLM, Jean-Cyril Spinetta, said in a newspaper interview on Monday he expected talks on a possible alliance with Alitalia to start next month.

It boggles my mind why Alitalia chose Rome as its hub and not Milan. Milan is by far the economic powerhouse of Italy, there are 3 times as many people living in a 50-100km circle around Milan than there are in the same circle around Rome and so on.


In a 75 km circe around Milan live some 7 million people while in a 75 km circe around Rome live some 4 million people. Still today Rome and Milan have roughly the same amount of passengers, even with the current hub layout.
Plus, all the maintenance facilities and staff are based in Rome, as well as most of flying personnel.

Actually in a radium of 75 km from Milan city center there are about 8.5 mio inhabitants

Lufthansa, consortium in talks on Alitalia-source

ROME, Oct 18 (Reuters) - A consortium led by Italian lawyer Antonio Baldassarre is in early stage talks with German airline Lufthansa on a possible bid for Alitalia , an Italian source close to the consortium said on Thursday.

Baldassarre's group and Lufthansa were shortlisted separately among six groups including rivals Air France and Aeroflot that Alitalia has identified as potential buyers.

The airline will select its preferred partner within the first 10 days of November, but whether the suitor will buy the Italian Treasury's entire 49.9 percent stake in the airline has yet to be decided, its chairman told lawmakers on Thursday.

Chairman Maurizio Prato also denied Air France is the Italian government's partner of choice, saying there had been no pressure from Rome to pick one group over the other, an Italian lawmaker present at the hearing said.

Shares of Alitalia, which is worth about 1.2 billion euros and expected to lose 400 million euros this year excluding special items, were up less than 1 percent in early afternoon trading.

The airline has been ramping up efforts to quickly find a buyer after an earlier auction by Rome failed in July, embarrassing the government and sending the carrier back to square one in its hunt for a suitor.

Among the six groups shortlisted, Baldassarre's is the least known and has come under scrutiny over whether it has the financial backing to pull off a deal.

Alitalia has said it would start talks with Baldassarre's consortium, which says it has set aside an initial 1.5 billion euros to buy the airline, only after it proves it has sufficient financial muscle.

"The contacts could end with the German company entering the consortium with an agreement for future collaboration, or in nothing," the source close to the consortium said.

Lufthansa declined to comment. The airline did not participate in the failed auction earlier this year when all the bidders pulled out, saying it was not interested under prevailing conditions.

The German airline has since said it is open to potential talks, but that any partnership with Alitalia must make sense for both sides.

CEO Wolfgang Mayrhuber told the Financial Times Deutschland newspaper that he did not have enough insight to judge whether Alitalia had resolved its problems, but he doubted it.

Alitalia workers strike, 250 Milan flights cut

MILAN, Oct 22 (Reuters) - Striking Alitalia workers forced more than 250 flights at Milan's airports to be cancelled on Monday in a protest at the struggling carrier's cutback plans.

Strikers blocked access to the main international airport, Malpensa, as part of the four-hour stoppage, Milan airport operator Sea said. The strike was the latest in a string of labour actions to hit Italy's national airline.

At least 197 takeoffs and arrivals were cancelled at Malpensa, and another 57 at the smaller Linate airport, Sea said.

The stoppage coincides with a visit to Italy by officials of the International Exhibitions Bureau. They are evaluating Milan's candidacy to host an international expo in 2015.

Alitalia said in August it would cut its presence in Milan, the hub of Italy's industrial north, as part of a survival plan as it looks for a buyer.

Another 25 flights were cancelled at Rome's Fiumicino and Ciampino airports because air traffic controllers struck for four hours over a contract dispute, air traffic control company Enav said in a statement.

A strike by Rome service crews also grounded or delayed some flights of low-cost carriers, the Rome airport operator said.

Alitalia unions back dropping two-hub strategy

ROME, Oct 23 (Reuters) - Alitalia's powerful labour unions said on Tuesday they agreed the struggling Italian airline's plan to drop its two-hub strategy made sense, in a surprise boost to the carrier's efforts to find a buyer.

Only last month the unions slammed the restructuring plan -- which aims to cut Alitalia's presence in Milan -- as "confused" and a "slow agony" and criticised the attitude of the airline's management, but they appeared to have softened their view following one of several recent meetings with new Chairman Maurizio Prato on Monday.

"What is needed is an analysis that considers the real difficulties and, above all, the awareness that leaving the situation unchanged could mean the end of Alitalia," the unions said in a statement.

"In fact, it is impossible to efficiently preside over two big intercontinental airports."

Nevertheless, the union said the impact on employment must be considered so that workers do not end up paying for political short-sightedness.

Alitalia, which is trying to find a buyer to stave off collapse, has often been hit by sudden strikes, most recently in Milan on Monday, which forced the cancellation of more than 200 flights.

Prato has said his airline will identify its ideal partner out of a list of six potential buyers by Nov. 10. One of those on the list, Air France KLM , is expected to decide on its next move on Alitalia on Friday, according to a report.

TPG can't form Italian consortium, Alitalia says

ROME, Oct 23 (Reuters) - Alitalia said on Tuesday that U.S. private equity firm TPG, which it had identified among possible buyers, was not currrently able to form a sufficiently Italian-based consortium to invest in the ailing airline.

However, TPG maintained an interest in the sale process, Alitalia said in a statement.

TPG [TPG.UL] was shortlisted by Alitalia among six potential investors after an auction to sell the state's 49.9 percent stake in the airline collapsed in the summer.

Alitalia Bids Deadline May Be Delayed To Nov 20 - Newspaper
11 November 2007

ROME (Dow Jones)--The Italian treasury, which is trying to sell its controlling stake in Alitalia SpA (AZA.MI), is set to delay the deadline to present binding bids for the loss-making carrier by a week to Nov. 20, daily la Repubblica reports Sunday.

The Italian government has been struggling to sell its 49.9% stake. A tender organized by the treasury was scrapped in July after all the potential bidders gradually pulled out, saying the sale terms didn't give them enough freedom to implement a restructuring strategy.

After the auction collapsed, the government appointed a new chief executive at Alitalia, charged with finding a buyer for the ailing carrier.

Last month, Alitalia said it had six potential suitors, including leading European carriers Air France-KLM (AKH) and Deutsche Lufthansa AG (DLAKY).

Air One, Italy's second-biggest carrier by passenger numbers after Alitalia, is also a potential buyer. The holding company which controls Air One said earlier this week that Goldman Sachs (GS) will act as adviser for a bid it is preparing with the support of Italian bank Intesa Sanpaolo (ISP.MI).

Beset by high operating and fuel costs, stiff competition from budget airlines and persistent labor strikes, Alitalia's net loss widened to EUR626 million in 2006 from EUR168 million a year earlier after it booked a hefty write-down to cover the depreciation in value of its aging fleet.

Alitalia may have to file for bankruptcy in a few months if government attempts to sell the stake fail, Italy's transport minister said earlier this week.

This thread makes me sad but if they're always losing money something needs to be done. Has anyone else here flown Alitalia? I had a round trip flight from Rome to Catania for a day trip on their MD-80's and the flight experience each way was excellent.

This thread makes me sad but if they're always losing money something needs to be done. Has anyone else here flown Alitalia? I had a round trip flight from Rome to Catania for a day trip on their MD-80's and the flight experience each way was excellent.

These types of stories involving national carriers has been quite common of late as the industry goes through fundamental change. Open skies, deregulation, and the emergence of low cost carriers have prompted changes to the industry, and have inflicted a lot of casualties among old legacy and new carriers.

Alitalia third-quarter losses narrow; no update on search for a new owner
13 November 2007

ROME (AP) - Alitalia SpA's pretax loss narrowed slightly in the third quarter, the Italian state-controlled airline said Tuesday, but it gave no update on its prospects for getting a new owner.

Italy's largest airline said its pretax loss in the quarter that ended Sept. 30 was cut to 57.6 million euros ($84.1 million) from 66.4 million euros a year earlier. The airline has endured tough competition from low-cost airlines and flight cancellations due to labor strikes.

But the market's real focus was on news of the Italian government's efforts to sell its 49.9 percent stake in the airline. Alitalia Chairman Maurizio Prato had said news would come by mid-November.

The government has been struggling to make a deal. A tender organized by the government was scrapped in July after all the potential buyers gradually pulled out, saying the terms were too stringent.

After the auction collapsed, the government appointed Prato, the third person this year to lead the airline, with the specific goal of finding a buyer.

Last month, Alitalia said it had six potential suitors, including leading European carriers Air France-KLM, Deutsche Lufthansa AG and Air One, Italy's No. 2 carrier in terms of passengers served.

Lufthansa Plan For Alitalia Focuses On Malpensa, Cuts -Report
15 November 2007

MILAN (Dow Jones)-- Deutsche Lufthansa AG's (DLAKY) plan for Italy's ailing Alitalia SpA (AZA.MI) would focus on strengthening Milan's Malpensa airport and reducing Alitalia's fleet by 50 planes, Italian daily Il Sole 24-Ore reports Thursday without citing sources.

Under Lufthansa's plan, Malpensa would become Italy's main airport for intercontinental flights, while Rome's Fiumicino would be the main hub for Africa and the Middle East.

The plan also foresees a "substantial restructuring" in terms of jobs, Il Sole reports.

Alitalia, searching for a buyer for the government's controlling stake, is now in talks with several possible investors including domestic rival Air One, long-time commercial partner Air France-KLM (AKH), Germany's Lufthansa and Russia's Aeroflot (AFLT.RS).

Italian Transport Minister Alessandro Bianchi said Wednesday that the sale of the government's controlling stake in Alitalia would be completed very soon.

Italy Min Rules Out Delay Of Alitalia Sale To 2008
26 November 2007

MILAN (Dow Jones)--Italian transport minister Alessandro Bianchi Monday ruled out a possible delay of the sale of Italian carrier Alitalia SpA (AZA.MI) until next year.

"I believe it is a matter of days," Bianchi said when asked to comment on the soon-to-be announced sale of Alitalia. Bianchi said the government plan is to sell the majority stake it holds in Alitalia by the end of this year.

Reports: Prodi says he thinks Alitalia will have a buyer by Christmas
27 November 2007

ROME (AP) - Italy's premier believes troubled national carrier Alitalia SpA would find a buyer by Christmas, according to news reports Tuesday.

The government has been struggling to sell its 49.9 percent stake in Alitalia, for which potential suitors include Germany's Deutsche Lufthansa AG, Air France-KLM and Air One, Italy's No. 2 carrier by number of passengers after Alitalia.

On Sunday, Lufthansa CEO Wolfgang Mayrhuber was quoted as saying in an interview with the Frankfurter Allgemeine Sonntagszeitung newspaper that the airline would likely decide by the end of the year whether to make a bid for Alitalia.

Asked by journalists Tuesday if a Christmas timeframe was accurate for finding a potential partner, Premier Romano Prodi responded: "I think so," the ANSA and Apcom news agencies reported.

A tender organized by the government was scrapped in July after all the potential buyers gradually pulled out, saying the terms were too stringent. After the auction collapsed, the government appointed a new chairman, Maurizio Prato, to lead the airline, with the specific goal of finding a buyer.

Alitalia has been hurt by high operating and fuel costs, stiff competition from budget airlines and persistent labor unrest. Its net loss widened to 626 million euros ($917.34 million) in 2006 from 168 million euros ($246.19 million) a year earlier after it booked a hefty write-down to cover the depreciation in value of its aging fleet.

(30 November 2007)

Alitalia flights from Heathrow to Rome and Milan Malpensa have been cancelled today along with inbound services during a strike by Italian transport unions.

The work stoppage at the airline was expected to last four hours between 11am and 3pm UK Time, although trains, buses and ferries across Italy will halt for eight hours in a strike against cuts in public services. Staff at car rental firms also stopped work.^^

MILAN (Thomson Financial) - Italy's prime minister Romano Prodi said that Air France-KLM is one of three contenders interested in taking control of Alitalia SpA.

Speaking at the Franco-Italian summit in Nice, Prodi said that Alitalia was not discussed.

But he added that in a few days the experts will present their opinion on who the partner should be to enter into exclusive talks with Alitalia.

'Among these three contenders there is Air France (nyse: AKH - news - people ),' he said.

The other two partners identified by government sources are Deutsche Lufthansa AG (other-otc: DLAKY.PK - news - people ) and Italy's Air One airline, which has support from Intesa Sanpaolo SpA.

stephen.jewkes@thomson.com:bash:

(30 November 2007)

Alitalia flights from Heathrow to Rome and Milan Malpensa have been cancelled today along with inbound services during a strike by Italian transport unions.

The work stoppage at the airline was expected to last four hours between 11am and 3pm UK Time, although trains, buses and ferries across Italy will halt for eight hours in a strike against cuts in public services. Staff at car rental firms also stopped work.^^

That's part of :

Italy hit by nationwide transport strike

ROME, Nov 30 (Reuters) - Planes, trains, buses and ferries came to a halt in Italy on Friday as workers across virtually all transport services staged a nationwide strike.

Transport strikes are common in Italy but local media said Friday's protest was the first on such a scale for 25 years, with even cable cars, funeral hearses and highway breakdown vehicles grinding to a halt.

In most cities, public transport stopped at around 9 a.m. local time (0800 GMT), forcing many commuters to leave early for work. National carrier Alitalia cancelled more than 200 flights.

More than 160 flights were cancelled at Rome's main Fiumicino airport alone and railway service was hard hit in several parts of the country, with almost all trains cancelled in Florence.

Trains and boats crossing the Straits of Messina connecting Sicily to the mainland also ground to a halt. Subway services in Rome and Milan were suspended.

Workers are protesting cuts to the sector in the 2008 budget and the lack of investment in transport. Unions have threatened more protests if their concerns are not addressed.

"We are united, at least I believe. People are with us," said Giorgio Martello, a bus driver.

Major Italian unions said a high percentage of transport workers adhered to the strike, with the rate at 100 percent in many areas.

Commuters put on a brave face.

"I believe they are right to strike, even if it creates disruption," said Filippo Mainardi, hoping to catch an early train at Rome's main station.

For people in the capital, the only consolation was the end of a protest by taxi drivers that had paralysed the centre of the city for two days.

LONDON (Thomson Financial) - Europe's leading exchanges are expected to open with gains for a third straight session following an advance on Wall Street overnight, with Alitalia and Iberia stepping into the spotlight again as their fates are left undecided.

Last night, Wall Street closed higher after weak labour and housing reports stirred hopes that the Federal Reserve will cut rates again.

The Dow Jones Industrial Average added 22.28 points or 0.17 pct to 13,311.73, while the broader S&P 500 rose 0.70 points or 0.05 pct to 1,469.72.

The technology-laden Nasdaq ended 5.22 points or 0.20 pct higher at 2,668.13.

Asian markets largely mirrored the development on Wall Street and the Nikkei 225 advanced 166.93 points or 1.08 pct to 15,680.67, while the Hang Seng gained 177.53 points or 0.62 pct to 28,660.07.

Oil prices spiked early then fell back somewhat after a fire broke at an Enbridge Energy pipeline carrying crude from Canada to the US. Light, sweet crude for January delivery rose 39 cents to settle at 91.01 usd a barrel in choppy trading on the New York Mercantile Exchange.

Today, some volatility is expected as US companies close their books on the last day of business for this full fiscal year.

Back in Europe, the fate of Italian airline Alitalia is left undecided as Air France-KLM said it will not get involved in an acquisition of the group or its Spanish peer Iberia unless its goal of raising after-tax return on capital employed to 8.5 pct in 2009-10 from 7 pct in 2007-08 is unaffected by the deal.

In the oil and gas sector, EDF and Enel are in focus as Enel CEO Fulvio Conti confirmed last night that he will be in Nice today where the Italy-France summit is taking place. The statement added to speculation that an agreement between the groups is likely to be signed at the event today.

Yesterday, France's President Nicolas Sarkozy said the French government will sell a 3 pct stake in EDF for around 5 bln eur to help finance French universities.

Over in the German market, mobile phone supplier Balda is in focus after US investor Guy Wyser-Pratte said owners of Balda AG, in which he also holds shares, are likely holding talks to sell a stake in the company, according to Financial Times Deutschland. 'I am certain there are such talks,' Wyser-Pratte told the newspaper, without being more specific.

Meanwhile, among pharmaceuticals Sanofi-Aventis and Astellas Pharma are of interest as they will restructure their Japanese joint venture FSA. Under the new plan, Sanofi-Aventis will get certain rights to insomnia drug Myslee while the venture's other drugs, notably Primperan, Dogmatyl and Gramalil, will be sold exclusively by Astellas, Sanofi-Aventis said.

And in earnings news, Portugal's Sonae SGPS said its pro-forma net profit at its soon to be spun off Sonae Capital unit rose 23.8 pct in the nine months to September to 13 mln eur from 11 mln a year earlier.

patrizia.kokot@thomson.com
AFX News Limited
:cheers:

Ryanair sues EU, alleges failure to investigate Italian state aid to Alitalia
30 November 2007

DUBLIN, Ireland (AP) - Ryanair Holdings PLC filed its fifth lawsuit Friday against the European Commission, this time alleging that the European Union's executive arm has failed to investigate state aid to struggling Italian airline Alitalia.

Ryanair, the No. 1 no-frills airline and a frequent critic of EU regulators, filed all five lawsuits this month at the European Court of First Instance in Luxembourg. Its previous suits allege an EU refusal to investigate Ryanair complaints about government subsidies that benefit Air France, Germany's Lufthansa, Greece's Olympic Airlines and Alitalia subsidiary Volare.

The Ryanair legal barrage appears inspired, in part, by a desire for retaliation against EU authorities, who have taken up other airlines' complaints alleging unfair business practices by Ryanair.

EU competition authorities are probing several of Ryanair's deals with small regional airports from Finland to Sardinia. Their latest case, announced Wednesday, challenges Ryanair's contract for operating flights to Pau, southwest France. In most cases, Ryanair is accused of benefiting from contracts subsidized by local governments or chambers of commerce seeking to put their far-flung regions on the tourist and business map.

In June, EU competition chiefs also rejected Ryanair's plans for acquiring Irish rival Aer Lingus, their first such refusal following approvals of four other airline mergers.

Ryanair Chief Executive Michael O'Leary accused the Italian government of giving Alitalia euro1.7 billion (US$2.5 billion) in illegal benefits. He said Ryanair complained about the practice in 2005 but nothing had happened.

"The ongoing state aid to Alitalia is a perfect example of the (European) Commission's bias towards inefficient national airlines," O'Leary said.

He said Alitalia was losing more than euro400 million (US$590 million) annually "and the Italian government continues to illegally bail it out."

"We are calling on the commission to end its discriminatory and biased approach to state aid enforcement, to start promoting competition and consumer choice, and to put an end to this scandal of unlawful state aid to flag carrier airlines," he said.

Contest for Alitalia tests "Italian solution"

ROME, Dec 7 (Reuters) - The battle to buy Alitalia will turn on whether the ailing airline prefers an Italian solution appeasing unions and politicians, or the stronger prospect of a turnaround offered by joining a larger rival, analysts say.

After a year on the block, Alitalia on Thursday received offers from Air France-KLM and domestic rival Air One for the 49.9 percent stake held by the Italian state.

A third offer from a group led by an Italian lawyer may not proceed since it was ruled out by Alitalia previously for not proving it had the funds to pull off a deal.

Alitalia is expected to identify a bidder for exclusive talks next week and analysts say the choice is far from obvious.

The Air One choice is seen as politically expedient, but Air France with its financial muscle and rigorous approach is seen by some analysts as more likely to restore Alitalia to long term health.

"With this decision we will see whether they are working for the short-term or the long-term," said Nicolo Nunziata, analyst at J&C Associati in Milan. "The meaning of this decision will be important -- Air France would be a move for the long-term and Air One for the short-term."

The price offered is expected to play a less decisive role because Alitalia's losses and inefficiency mean it is unlikely to garner bids anywhere close to its 1.1 billion euro market value, analysts say. It also has 1.2 billion euros in debt.

Analysts also warn that having two serious bidders in the fray does not mean a deal will be sealed and the sale could yet fall apart again, just as a previous auction did in July.

ITALIAN OPTION

Air One is likely to be favoured by labour unions and politicians as it would keep Alitalia in Italian hands and ensure the politically useful -- but expensive -- strategy of keeping twin hubs in Rome and Milan is continued.

Alitalia's decision in August to scale back its Milan hub set off a storm of protests from regional politicians. Air One says it will maintain the two hubs, while Air France says it will ditch the Milan hub to focus on Rome.

But analysts raise doubts about Air One's ability to turn round an airline that loses more than a million euros a day or whether, as an Italian company, it can sidestep the same political interference that plagued Alitalia.

Despite its global ambitions, Air One is dwarfed by Air France-KLM. The world's largest airline by sales is 37 times larger by revenue and its aircraft fleet is 10 times bigger.

Air One has tried to counter doubts by promising to invest 4 billon euros in Alitalia and winning the backing of top banks including Intesa Sanpaolo, Goldman Sachs, Morgan Stanley and Nomura. It has also played up its Italian credentials and says its plans are for the long term.

"They are very convinced on this deal and they need it to survive," said Oliviero Baccelli at Bocconi University's transport economics research centre.

Still, analysts say a deal with Air France-KLM is the safer bet for Alitalia to stem the bleeding that has brought it close to bankruptcy before and led its chairman to call it "comatose".

" Air France-KLM are the most suited investor to take over Alitalia, more so than Lufthansa because they've gone through the process of merging two totally different airlines," said Diogenis Papiomytis, aviation consultant at Frost & Sullivan.

Air France has also made it clear it will not do a deal that leaves it short of its profit and return targets and analysts expect it to be more aggressive than Air One in cutting jobs and streamlining the airline -- both politically uncomfortable.

But Italy's persistent failure to turn around Alitalia may mean it is time to leave it to a new player, says Nunziata.

"If the old road is always wrong, try a new one," he said.

Italy takes more time to pick buyer for Alitalia

ROME, Dec 12 (Reuters) - Italy's government did not pick its preferred candidate to buy Alitalia as expected on Wednesday, leaving both Air France-KLM and domestic rival Air One still in the fray to buy the ailing airline.

After an intense media buildup to the high-level government meeting billed as decisive for Alitalia's fate, Italy's transport minister played it down as just a discussion of ideas.

"It was a meeting with an exchange of thoughts, there will be others in coming days," Alessandro Bianchi told reporters after it ended just before 11 pm local time (2200 GMT).

It came hours after he told Italian radio that Prime Minister Romano Prodi and his top ministers would decide on Wednesday on a buyer for the money-losing airline Italy has hawked for a year. Other ministers who attended departed without saying a word.

Alitalia's board is set to meet on Thursday. But it is unclear if it will identify a bidder for exclusive talks as planned since it was expected to rubber-stamp the choice made by the government, which owns 49.9 percent of the airline.

Air One, run by Italian businessman Carlo Toto and backed by the country's biggest retail bank, Intesa Sanpaolo , is the favorite of state-owned Alitalia's troublesome unions, regional politicians and business leaders.

But Air France-KLM, the world's largest airline group by revenue, is seen by analysts as having the strategic savvy and financial clout to pursue long-term restructuring at Alitalia, which bleeds over 1 million euros a day.

A third offer for the airline from a little-known group advised by an Italian lawyer is not expected to pose a threat, as it was ruled out last month for lack of funds.

POLITICS OVER PRICE?

Despite Alitalia's financial woes, the airline has the attraction of its dominance of the lucrative route for business travel between Italy's financial center Milan and Rome.

Analysts say political interests and strategic considerations will play a greater role in the final decision than the price offered, which is expected to be well below Alitalia's 1.1 billion euro market value.

It also carries 1.2 billion euros of debt.

The airline has said it would have enough money for the next year if it sold assets -- which is just as well, as the European Union earlier this year banned any more state aid.

Italy put the airline up for sale in December last year and in a first auction for the state's stake, the government stipulated that any buyer would have to retain Alitalia's Italian identity. But Prodi has now said Alitalia should go to the best bidder, with Italian ownership a secondary issue.

And Alitalia Chairman Maurizio Prato has said Air France's plan appeared clearer than that of Air One and more closely mirrored his own ideas for restructuring the airline.

The winning bidder would have to launch a tender offer for all Alitalia shares after completion of talks with the airline, a government source said.

That means the losing bidder in this round could still return to the game by launching a superior counterbid at that stage, the source said.

Air One has said that it would cut about 3,700 jobs and that investment banks backing its bid -- which aside from Intesa include Goldman Sachs Group , Morgan Stanley and Nomura Holdings Inc -- could take stakes in Alitalia.

Fewer specifics are known on Air France's offer, although the Franco-Dutch carrier has said its intentions echo those of the Italian airline's own restructuring plan unveiled in August.

Shares of Alitalia closed up nearly 3 percent at 0.88 euros ahead of the government meeting.

Shares in Alitalia plunge as details emerge on competing bids
17 December 2007

MILAN, Italy (AP) - Air France-KLM and Italian airline Air One SpA have confirmed some details of their competing bids for Italy's struggling national airline Alitalia, both promising to increase capital and modernize the fleet while laying off workers.

Alitalia's board will meet Tuesday to select which bidder will enter exclusive talks for the government's 49.9 percent stake in the airline -- a year after the government announced its intention to offload the money-losing carrier.

Analysts said the key difference in the bids would be the ability to see through a complicated restructuring.

Air One, Italy's second-biggest airline with a one-third market share, said Monday that it will bid euro0.01 (US$.01) a share, and plans a total investment of euro5.3 billion (US$7.63 billion) by 2012, including a capital hike of at least euro1 billion (US$1.44 billion) for the ailing carrier.

Air One aims to make Alitalia Europe's fourth-largest airline, breaking even by 2009, and will focus on renovating the fleet, investing euro3 billion (US$4.32 billion) over the next five years to buy 130 new planes. The new aircraft will include 90 Airbus A320, 20 Airbus A330 and 20 regional planes.

Renewing the fleet would be a priority, with plans to buy 130 new aircraft at a rate of 26 a year, Air One chairman Carlo Toto was quoted as saying by the newspaper Corriere della Sera.

"Alitalia is run today with old aircraft that have very high fuel and maintenance costs, besides offering a low quality of service," Toto told Corriere della Sera.

About 2,000 Alitalia employees would be laid off as the two airlines merge, Toto said.

Air France-KLM, meanwhile, confirmed details of its bid, saying it would make an immediate injection of euro750 million (US$1.08 billion) in new funds if selected as Alitalia's preferred buyer. The money would be raised from a capital increase open to all shareholders and guaranteed by Air France-KLM.

The Franco-Dutch carrier said the funds would be used to revamp cabin design, in-flight entertainment and ground services "to restore Alitalia's image and its stature as an international company."

Air France-KLM also placed a priority on renewing Alitalia's fleet, with plans to replace Alitalia's Boeing 767s and MD80 aircraft.

The Air France release did not mention its share price offer.

Analyst Diogenis Papiomytis with Frost & Sullivan said that while Air One may be more appealing as an Italian partner, Air France-KLM has the experience needed to engineer a complicated takeover. On that score, Air One is disadvantaged by being a smaller player.

"Obviously the important thing is they have the financial resources to turn Alitalia to profitability in the longer term," Papiomytis said. "Obviously, you need a long-term business plan and Air France-KLM have the financial resources to back that kind of play.

"They also have the long experience of merging two airlines," he said.

But there is also growing political pressure to keep Alitalia in Italian hands. The Air One bid is backed by Intesa Sanpaolo SpA.

After opening 1.7 percent higher at euro0.77 (US $1.12), Alitalia shares immediately turned lower and had to be suspended by the Milan stock exchange for excessive losses. They closed down 4.9 percent at euro0.72 (US$1.04).

Air France-KLM shares fell 3.9 percent to euro23.14 (US$33.57) in Paris.

The government announced its plans to sell a stake in Alitalia a year ago, but the attempts have run into trouble. A government auction was called off this summer after bidders walked away after they weren't allowed access to Alitalia's financial details and were not guaranteed full control of the airline.

No conditions have been announced on the current sale, although the winner will have to follow a new business plan adopted in July, which includes plans to focus on one hub, cut unprofitable routes and reduce the number of workers.

The winning bidder will take over an airline that has been losing between euro1 million and euro2 million (US$1.4 million and US$2.8 million) a day, and is battered by worker strikes while facing other conditions weighing down the industry, namely competition from budget carriers and high fuel costs.

Despite being unprofitable, Alitalia has a strong route network attractive to an airline investor, analysts note.

------

AP Business Writer Emma Vandore in Paris contributed to this report.

Regarding the Alitalia bid deal, I see the SQ 'involvement' very suspicious.

I think SQ has become a very influential player in Star Alliance, and it probably saw LH's Air One showing up a weak bid and did not want Skyteam to become too strong. It wouldn't bode well for LH nor SQ or any Star carrier.

I see the SQ 'involvement' as a warning to LH, and by extension, Air One, to take the bid of Alitalia seriously for the greater good for Star Alliance.

I find Star's policy is to grab as many markets as possible.

Star Alliance wants market share, and is willing to forgo quality and branding to get it. I was quite surprised they'd want Air India, which is not exactly a good reputation airline for service and timeliness.

But then, Alitalia is part of Skyteam.

N. Italy Officials Unite Vs. Air France
23 December 2007

MILAN, Italy (AP) - Officials in northern Italy are uniting in opposition to Air France-KLM's bid for ailing Alitalia SpA, which would make Rome the nation's only hub at the expense of Milan.

The Air France plan -- which the Alitalia board tipped Friday as its preferred bidder over Italian airline Air One SpA -- would do away with Alitalia's two-hub system, one at Rome's Leonardo da Vinci airport and the other at Milan's Malpensa.

Having a hub in Milan has been fiercely defended by northern politicians, but has been criticized as too expensive and impractical. Alitalia's board, under chairman Maurizio Prato, has already signaled its intention to cut traffic to Malpensa.

The Northern League -- a party with a strong regional identity -- has threatened strikes and blockades in opposition to the Air France bid.

David Boni, a northern League official, said the Air France-KLM plan would "put out of the game the only hub that could compete on an international level," while costing the north jobs, the news agency ANSA reported Sunday.

Lombardy regional president Roberto Formigoni called the board's decision "unacceptable," but noted that the ultimate choice of a preferred bidder for the government's 49.9 percent stake will be made by Prime Minister Romano Prodi's government next month.

He urged Rome not to "hide behind the board's decision," saying it "risks playing with fire ... if it abandons the most important territory in the country."

Guglielmo Epifani, leader of the CGIL labor confederation, came out Sunday against the Alitalia board's choice, citing the failure to guarantee Malpensa's future or to lay out plans for Alitalia's domestic routes.

"These are the problems that require a national operator to confront," Epifani said, according to ANSA. "That isn't simply a matter of the nationality of the company, but rather to have a response to these concerns."

Under Air France's plan, Rome's Leonardo da Vinci airport would be integrated into the Air France-KLM hub network as the primary airport for travelers to and from Italy, and would serve as a gateway to southern and eastern Europe and northern Africa, the Alitalia board statement Friday said.

"The new group, thanks to the presence of a hub in southern Europe, will improve its position with respect to its European competitors," the statement said.

Air France "foresees an important role" for Milan's two airports, with Linate, located in Milan, focused on business travelers while Malpensa would retain its three principal intercontinental connections to North America, South America and Asia, the statement said.

Rome's Leonardo da Vinci had 30.1 million passengers in 2006, while Malpensa had 21.8 million, according to the Airports Council International. Air France-KLM's other hubs, Paris' Charles De Gaulle and Amsterdam's Schipol, had 56.8 million and 46 million, respectively.

The government has been trying to off-load the loss-making Alitalia since last December.

Italy think-tank tells politicians to let Alitalia go

ROME, Dec 26 (Reuters) - An Italian think tank called on politicians on Wednesday to release their grip on flag carrier Alitalia and sell the airline to foreign bidder Air France-KLM.

Prime Minister Romano Prodi's cabinet will discuss on Friday what to do with the state's 49.9 percent stake in Alitalia , whose board has recommended the Air France bid and rejected one by a smaller Italian airline which is preferred by the biggest unions and many politicians.

Opponents to the foreign bid say the larger airline would swallow up Alitalia and turn it into a regional carrier. Politicians in the wealthy north say Air France's plan to centre operations in Rome, downgrading Milan, would be disastrous.

But the free-market Bruno Leoni Institute (IBL) said resistance to a foreign takeover was a symptom of Italy's reluctance to allow the market to decide if and how big companies survive.

"The fear of the political classes and the unions is all about losing decision-making power over Alitalia," said Andrea Giuricin of the IBL. "But it is precisely these two groups of people who are responsible for Alitalia's state of crisis."

Inefficiencies, incessant labour disputes and Alitalia's two hubs -- Rome and Milan -- are among the reasons blamed for its losing 1 million euros ($1.44 million) a day despite dominating the market in one of the world's most popular tourist destinations.

After years of state support -- now outlawed under European Union law -- Prodi vowed to completely privatise Alitalia, despite opposition from parts of his Catholics-to-communists coalition.

He now faces the tough decision of whether to sell to the Franco-Dutch airline or over-rule Alitalia's board and opt for a bid by private airline Air One, backed financially by Banca Intesa Sanpaolo and politically by the main unions, the head of employers' group Confindustria and northern politicians.

Air France-KLM promises to sink 6.5 billion euros in long-term investments into Italy's flag airline, preserve the Alitalia brand and an extensive network of routes in Italy. An Air One bid has the attraction of keeping Alitalia Italian.

A union representing air crews went against the current and came out on Wednesday in favour of the Air France bid. Avia said it would ballot its members of Jan. 3 and expected a resounding yes to the foreign takeover.

"Politicians should stop meddling with business decisions taken by a board which has knowledge and legitimacy," Avia President Antonio Di Vietri told ANSA news agency. "Defying those decisions would lead to bankruptcy within months."

Prodi has declined to be drawn on his preference and issued a statement denying an assertion by the Financial Times that he and his economy minister, Tommaso Padoa-Schioppa, favoured the Air France bid while most of his cabinet preferred the home-grown option.

For me it seems counterintuitive to demote Malpensa when Milan is the clear queen of the Italian economy and the most natural hub economically speaking. Wouldn't it be more lucrative to have a Milan-centered airline with all that business traffic?

Although, as we were discussing in the Spanish forum, it could be that AF-KLM simply want to push subsidiary Alitalia's hub further away from the "golden banana" of the EU as to not allow for competition with the main hubs of Paris and Schipol.

:dunno:

For me it seems counterintuitive to demote Malpensa when Milan is the clear queen of the Italian economy and the most natural hub economically speaking. Wouldn't it be more lucrative to have a Milan-centered airline with all that business traffic?


Facts have shown it isn't.
Currently Rome airport system has more passengers than Milan's, excluding transit passengers.

They surely produce lower yields but that's probably not a big issue. On the other hand, Rome is the third touristic destination in Europe and its economic importance is not that negligible. And while the economic strength of Milan is mainly due to small enterprises with little presence on global markets, all the bigs Italian firms (Finmeccanica, Eni, Enel) have their HQs in Rome, as well as main political, cultural and educational institutions of the country, the Vatican, etc.

Plus, Milan's airport system is split up into two distinct airports, and this is not good in an airline hub perspective, while Rome's is concentrated into just one (the second one being just a LCC airport). And let's not forget that Alitalia historical hub has been Rome for decades, and they still have there most of maintenance areas, employees, etc.

Facts have shown it isn't.
Currently Rome airport system has more passengers than Milan's, excluding transit passengers.
Because Roman politics requires more flights to go through the capital.

They surely produce lower yelds but that's probably not a big issue. On the other hand, Rome is the third touristic destination in Europe and its economic importance is not that negligible. And while the economic strength of Milan is mainly due to small enterprises with little presence on global markets, all the bigs Italian companies (Finmeccanica, Eni) have their HQs in Rome.
The two-hub structure for a relatively compact (although "long") country has been shown to be inadequate, so I agree with the fact that one city had to be chosen. I still fail to see how Milan's powerhouse status as capital of Lombardy and of the very wealthy Italian north could somehow be less worthy of status of "hub" versus a weaker Roman market.

Plus, Milan's airport system is split up into two distinct airports, and this is not good in an airline hub perspective, while Rome's is concentrated into just one (the second one being just a LCC airport). And let's not forget that Alitalia historical hub has been Rome for decades, and they still have there hangars, maintenance areas, employees, etc.
Alitalia finds itself having to sell itself to the French precisely BECAUSE there is no real single hub. That does not mean that an airline in Italy has to use Rome as its hub. It just shows that Alitalia will no long be Italian because no government had that cojones to realize that Rome did not deserve to be an international hub for Alitalia.

Because Roman politics requires more flights to go through the capital.


Would you care to explain?


The two-hub structure for a relatively compact (although "long") country has been shown to be inadequate, so I agree with the fact that one city had to be chosen. I still fail to see how Milan's powerhouse status as capital of Lombardy and of the very wealthy Italian north could somehow be less worthy of status of "hub" versus a weaker Roman market.

Alitalia finds itself having to sell itself to the French precisely BECAUSE there is no real single hub. That does not mean that an airline in Italy has to use Rome as its hub.

Currently, ALL Alitalia long haul routes but very few ones are Milan-bound. Still Alitalia losses are bigger than ever.


It just shows that Alitalia will no long be Italian because no government had that cojones to realize that Rome did not deserve to be an international hub for Alitalia.


Hopefully the French realized it deserves to be so. :|

And let's not forget that Alitalia historical hub has been Rome for decades, and they still have there most of maintenance areas, employees, etc.

This has been the real cause of Alitalia's disaster.

This has been the real cause of Alitalia's disaster.

Not at all, since until the 90s it was a successful airline.

Prodi: Milan's Malpensa Airport "Central" To Italy Economy
15 January 2008

MILAN (Dow Jones)--Milan's Malpensa airport has a "central" role in Italy's economy, Italian Prime Minister Romano Prodi said in a statement Tuesday.

Prodi issued the remarks after the first session of a round-table meeting - dubbed the "Tavolo Milano" - which brings together leaders from Italy's northern Lombardy region with the government aimed at discussing the future of Milan's intercontinental airport.

Malpensa risks having up to a third of its flights transferred to Rome or canceled as part of troubled airline Alitalia SpA's (AZA.MI) possible sale to Air France-KLM (3112.FR), northern political leaders have said.

Roberto Formigoni, president of the Lombardy region, has warned of the potential impact to jobs and the regional economy of such a move.

According to the statement, the meeting focused on four points: the "centrality" of Malpensa to Italy's economy, opportunities to be generated by liberalizing air transport, the national government's promise to complete planned infrastructure servicing the airport, and potential unemployment benefits as Malpensa deals with eventual reduced Alitalia traffic.

Another meeting of the Tavolo Milano is scheduled for next week.

This has been the real cause of Alitalia's disaster.

agree.

Not at all, since until the 90s it was a successful airline.

during the 90s MXP was a little pavillion fully pigeons...

Milan airport suffered of an huge delay of realization...

that was the problem IMO.

now the Italian reality needs a two-hub system (FCO/MXP) with no competition, but actually is not economically possible...

:cheers:

Italian economics minister says government was "horrible" manager of Alitalia
15 January 2008

ROME (AP) - Italy's finance minister told Parliament on Tuesday that the government has proven itself a "horrible" manager of Alitalia, noting that the company has continued to lose money, undergone constant management changes and failed to launch itself as one of Europe's top carriers.

Minister Tommaso Padoa Schioppa addressed skeptics trying to derail the government's decision to enter eight weeks of exclusive talks with Air France-KLM to sell the government's 49.9 percent stake in the struggling national carrier.

Conservative politicians prepared a series of motions aimed at getting the government to reverse its decision.

Politicians from the wealthy north are concerned about the Franco-Dutch carrier's plans to downgrade Milan's Malpensa from a hub while maintaining Rome's Leonardo da Vinci airport as Italy's sole hub. But Padoa Schioppa said the Alitalia rescue plan drawn up by management had already foreseen reducing routes to Malpensa and said the government was prepared to offer aid to for those losing their jobs.

"We need to say with honesty that the Italian state, without pointing to any political party, has proven itself over the years to be a horrible owner," Padoa Schioppa told lawmakers. "For at least 20 years, if not more, the so-called Italian system has been incapable of making its own flagship carrier, Alitalia, into one of the world's great airlines."

He noted that Alitalia has had nine chief executives over the last 15 years -- whereas Air France and Lufthansa have had two.

The Italian government picked the Franco-Dutch carrier to hold exclusive takeover talks late last month, preferring its bid to a rival one from smaller domestic airline Air One SpA.Air France-KLM Chairman Jean-Cyrill Spinetta last week confirmed that he plans to lay off about 1,700 Alitalia workers from a total of 20,000.

Padoa Schioppa said the government stands ready to help ease the impact of any layoffs that a sale of Alitalia SpA to Air France-KLM would bring.

Earlier Tuesday, Italian Prime Minister Romano Prodi told an Alitalia government meeting that he stood ready to help finance unemployment benefits needed for any layoffs.

Alitalia says it will sharply reduce flights from Milan to cut costs

MILAN, Feb 1, 2008 (AFP) - Financially-strapped Italian airline Alitalia said Friday it would sharly cut back on flights from Milan-Malpensa airport in late March in order to reduce costs.

The carrier said it had given up some of the slots it controls at the airport that it would not be using during its summer season, which runs from March 30 to October 25.

Alitalia is currently in talks with Air France-KLM that could lead to its takeover by the French and Dutch group, which has backed Alitalia's plans to reduce operations in Milan.

Alitalia, in which the state currently has a 49.9 percent interest, did not reveal the number of slots it had given up. Regional officials in early January said the company was planning to cut nearly 800 flights a week, 134 of them intercontinental, from a total of 1,238.

The carrier on Friday would not confirm the figures.

Chance of rival Alitalia bid raises Milan's hopes

MILAN, Feb 4 (Reuters) - A promise of a rival bid for Italian airline Alitalia raised local hopes of a reprieve for Milan's Malpensa airport on Monday as flight cuts threaten to reduce its reach, just as the city pitches to host the global Expo 2015.

Domestic rival Air One, whose previous bid for the state's 49.9 percent stake in Alitalia was snubbed, said it would present an offer soon for the airline, which is in exclusive talks until mid-March with Air France-KLM .

Milan's Chamber of Commerce said it may back the bid, which has the support of Italy's biggest retail bank, Intesa Sanpaolo . Air One is challenging Alitalia over the exclusive talks in court and has a first hearing on Tuesday.

Air France-KLM backs plans for Alitalia to slash flights at Malpensa by 70 percent and use Rome's Fiumicino as its only hub. Air One has said it would maintain Malpensa's standing.

Shares in Alitalia were up 3.62 percent to 69 euro cents by 1116 GMT against a 0.55 percent rise in the overall index <.MIBTEL>.

The company is discussing an all-share offer from Air France-KLM worth 35 euro cents per share. Investors are betting that will either be raised or that Air One's rival bid will gain ground.

Talks with Air France-KLM were agreed by the outgoing government before the resignation of Romano Prodi triggered a political crisis which looks likely to head to an election. Opposition leader Silvio Berlusconi is the poll favourite.

On Sunday, Economy Minister Tommaso Padoa-Schioppa said the sale would go ahead despite the government's collapse and legal challenges from Malpensa and Air One.

Economic Development Minister Pierluigi Bersani said on Monday the connection between Alitalia and Malpensa had no market logic.

Bersani added the government would have been "crazy" to be prejudiced against an Italian bid, if one existed.

"If there are real proposals, they should be presented clearly and responsibly ... you don't make proposals through the newspapers," he said on the sidelines of a conference.

The government has called a key meeting on Malpensa's future this week.

Airport operator SEA will seek $1.86 billion of damages from Alitalia over its plans to slash flights at Malpensa, which is about 40 km (25 miles) northwest of Milan, Italy's financial and fashion capital.

WORLD FAIR AMBITION

Outraged local politicians, with an eye on their electoral heartland, and business leaders weighed into the debate over the airport's future as Milan promoted its candidacy to host Expo 2015.

"We are asking for a moratorium of at least two years, any other proposal would be unacceptable," said Luca Cordero di Montezemolo, head of business group Confindustria.

"We have to watch out for an area of the country which represents the jewel of Italy in production, commerce and international relations, which is the north," he added.

Italy's wealthiest regions with the highest growth rates are in its northern regions, many served by Malpensa for international flights.

"We're pushing very hard for a moratorium ... we want flights to be maintained for as long as it takes to substitute the flagship carrier," Diana Bracco, chairman of local business group Assolombardia, said at an Expo 2015 forum.

The local Lombardy region "cannot be penalised, I hope the government understands that," said regional governor Roberto Formigoni. "The strengthening of the Air One consortium is very positive," Formigoni added.

Newspapers reported over the weekend that Milan-based business leaders such as fashion designer Giorgio Armani and Pirelli Chairman Marco Tronchetti Provera could join Air One's bid. Armani was not immediately available to comment.

Court decision on Alitalia talks protest by Feb. 20

ROME, Feb 5 (Reuters) - An Italian regional court will decide on Feb. 20 whether to annul a decision allowing Air France-KLM to hold exclusive talks to acquire Alitalia , judicial sources told Reuters on Tuesday.

The TAR court is reviewing a lawsuit filed last month by Alitalia's domestic rival Air One as it prepared another bid for the loss-making airline.

Air One's previous offer was rejected by the outgoing government in favour of the one made by Air France-KLM, whose talks with the Italian airline are to last until mid-March.

The prospect of another bid has been pushing Alitalia shares higher. They were up nearly 3 percent to their highest since Jan. 21 in morning trade before turning negative amid a broader market slide.

Air France-KLM is offering 0.35 euro per share for Alitalia in an all-share deal.

With Italians set to go back to the polls in mid-April after the collapse of Prime Minister Romano Prodi's government, doubts about whether the sale will go through have risen. Prodi's government launched Alitalia's sale in December 2006 by putting up for sale the Italian state's 49.9 percent stake in the carrier.

Italian Infrastructure Minister Antonio Di Pietro said it would be inappropriate for a fallen government to approve a deal on Alitalia.

"Even if correct from a formal point of view, I believe it would inappropriate that an operation of such importance would be pushed through by a government that is expiring, or in fact, expired," Di Pietro told reporters at an event in Milan.

The prospect of Air France-KLM taking over Alitalia has met fierce opposition from politicians and business leaders in northern Italy over fears the region's main airport will lose its importance.

Even the manager of the airport, known as Malpensa and located near the country's finance and fashion capital of Milan, plans to file a lawsuit seeking damages over Alitalia's plans to slash its flights at Malpensa and refocus on its hub in Rome.

Alitalia will more than halve its slots at Malpensa to 170 daily from 350, the head of the airline's passenger and cargo division told a news conference on Tuesday.

Air One has won the backing of Italian banking giant Intesa Sanpaolo and local newspapers have reported a growing number of business leaders willing to help with its new bid.

The latest one to lend its support was UCIMU, an association of machine tool manufacturers, nearly all of whose members are based in northern Italy.

But one local politician warned time was running out for them to find an alternative solution to Alitalia's future.

"We can't allow ourselves to prolong this and bring about Alitalia's collapse," Filippo Penati, head of the province of Milan, told reporters at an event on Tuesday.

Alitalia is losing more than 1 million euros a day and executives warn it will need a cash injection of at least 750 million euros ($1.11 billion) to keep flying solo if it is not bought by the middle of this year.

Milanese business backs Alitalia counterbid

MILAN, Feb 4 (Reuters) - Milan business leaders threw their weight behind a promised counterbid for Alitalia on Monday, hoping to stave off flight cutbacks at Malpensa, the loss-making airline's northern Italian hub.

Domestic rival AirOne -- whose previous bid for the state's 49.9 percent stake in Alitalia was snubbed -- said on Sunday it would present an offer soon for the airline, which is in exclusive talks until mid-March with Air France-KLM .

Milan's Chamber of Commerce said it may back AirOne's bid, which has the support of Italy's biggest retail bank, Intesa Sanpaolo . AirOne is challenging Alitalia over the exclusive talks in court and has a first hearing on Tuesday.

"AirOne simply asked to be able to present a final proposal," Intesa Sanpaolo Chief Executive Corrado Passera told reporters at a forum on Expo 2015 on Monday.

Passera said the group backing AirOne's bid was not yet complete but there was "strong interest" from northern business leaders and other banks.

Pirelli & C could make a small investment in the initiative, but would first want to see the details, a source close to the matter told Reuters.

Weekend newspapers said Pirelli Chairman Marco Tronchetti Provera and other Milan-based business leaders such as fashion designer Giorgio Armani could join AirOne's bid.

Pirelli has declined comment, while Armani was not immediately available for comment.

Air France-KLM backs plans for Alitalia to slash flights at Malpensa by 70 percent, while AirOne has said it would keep the airport's standing.

Alitalia is discussing an all-share offer from Air France-KLM worth 0.35 euros per share but investors are betting the offer will either be raised or AirOne's rival bid will gain ground. Alitalia shares ended up 4.75 percent at 0.69 euro.

TALKS WILL CONTINUE

On Sunday, Italy's Economy Minister Tommaso Padoa-Schioppa said the sale would go ahead despite the resignation of Romano Prodi's government, which looks likely to head to an election. Opposition leader Silvio Berlusconi is the poll favourite.

In a Monday interview with France's La Tribune newspaper, French Secretary of State for Transport Dominique Bussereau said the demise of Prodi's government could make talks over Alitalia more difficult, but did not put a stop to them.

Adding a sense of urgency, Alitalia said on Monday its delicate financial state put constraints on the calendar for the talks.

Malpensa operator SEA will seek $1.86 billion in damages from Alitalia over the airline's plans to slash flights at the airport, about 40 km (25 miles) northwest from Milan, Italy's financial and fashion capital.

Alitalia said it had not yet been notified of the legal action threatened by SEA, but legal sources told Reuters it should happen by Friday.

Local politicians, with an eye on their electoral heartland, and business leaders weighed into the debate over the airport's future as Milan bid to host the Universal Exhibition in 2015.

"We are asking for a moratorium of at least two years, any other proposal would be unacceptable," said Luca Cordero di Montezemolo, head of business group Confindustria.

Italy's wealthiest and fastest-growing areas are in the north, and many are served by Malpensa for international flights.

The local Lombardy region "cannot be penalised, I hope the government understands that," said the region's governor, Roberto Formigoni.

Ahead of a key meeting on Malpensa this week, Padoa-Schioppa said he did not understand why the country's richest region could not present a business project to safeguard Malpensa and Alitalia's future.

Air One says new investors welcome in Alitalia bid

MILAN, Feb 7 (Reuters) - Air One said its renewed bid for Alitalia was open to domestic and foreign investors, as the small Italian airline continued efforts to drum up support for its plans to buy the country's flagship airline.

Air One has filed a lawsuit seeking an annulment of the decision allowing exclusive talks between Alitalia and Air France-KLM and is preparing a new bid after its previous offer was rejected by Italy's outgoing government.

"The project is open to various parties: national and international," Air One chief Carlo Toto told an event on Thursday on the future of Milan's Malpensa international airport, which stands to lose a large number of flights as Alitalia restructures itself.

Newspapers had said Giorgio Armani could back Air One's bid, but a spokesman for the Milan-based fashion designer said on Thursday the reports were incorrect.

Air One has the backing of Italian bank Intesa Sanpaolo , which said on Thursday it would wait for the court's decision before making its next move.

The administrative court in Lazio's province has set Feb. 20 for a decision on the lawsuit and asked all parties involved to hold off on any actions that could change the state of play in the battle for control of Alitalia.

Maybe the government should do what they've been doing with Alitalia for years, just keep throwing money at it. It's a great airline in my opinion. I guess I just don't understand the economics as to why it's not making money.

Maybe the government should do what they've been doing with Alitalia for years, just keep throwing money at it. It's a great airline in my opinion. I guess I just don't understand the economics as to why it's not making money.

bad politics and unions for example

Alitalia losses narrow, but warns on 2008

ROME, Feb 13 (Reuters) - Italian airline Alitalia lost nearly 364 million euros ($530.1 million) in 2007 as it waited to be sold, and warned that results this year would be worse than previously forecast while it tries to fend off a liquidity crisis.

The carrier, which expects to wrap up exclusive merger talks with Air France-KLM in about a month, has not posted an operating profit since 1998. It blamed high fuel costs, labour strikes and stiff competition for its poor performance.

It reiterated that it needed to sell assets and receive a cash infusion to the tune of 750 million euros by mid-year to continue operating normally.

Still, it said liquidity could remain positive, if sharply lower, this year even without the "indispensable" capital hike.

The state-controlled airline, which last year wrote down the value of its fleet, also said it had called in an independent expert to estimate the sale value of its aircraft.

The carrier's pretax loss narrowed to 363.9 million euros in 2007, from a loss of 605.2 million euros a year earlier when the 197 million euro fleet write-down had dragged down results.

Its 2007 operating loss also narrowed to 202.9 million euros, from a loss of 465.7 million euros a year earlier.

It was the airline's ninth consecutive year of reporting an operating loss. Operating revenues inched up 3 percent to 4.86 billion euros.

The company, in which the Italian state has a 49.9 percent stake, said its operating margin in 2008 would improve slightly from 2007 but showed a "material worsening" when compared with projections in its industrial plan.

A delay in any of its projects slated for implementation could also mean it would have to speed up the capital increase process, it warned.

Alitalia's exclusive talks about a possible sale of the carrier to Air France-KLM are continuing despite the fall of the government that chose it as Alitalia's partner and a court case raised by rival bidder Air One.

The head of Air One, Carlo Toto, has been trying to drum up support among businessmen for a revised offer and has secured a freeze on new developments until a court hearing on Feb. 20.

Shares of Alitalia, which is worth about $1.3 billion on the market, have tumbled nearly 40 percent over the past year, underperforming the broader European airline sector which fell 28 percent over the same period, according to Reuters data.

Italian right vows to delay Alitalia hub plans

MILAN, Feb 17 (Reuters) - The leaders of Italy's Northern League said on Sunday it was right to sell loss-making carrier Alitalia to Air France-KLM but vowed to put on hold for three years planned flight cuts from Milan's Malpensa airport.

Thousands of demonstrators gathered outside the airport to protest against Alitalia's and Air France's plan to downgrade Malpensa's hub status in favour of Rome.

Alitalia, which plans to cut its daily flights from Malpensa to 105 a day from 360 from April 1, is in exclusive talks to be bought by Air France-KLM. The airport is seeking $1.86 billion in damages from the airline.

"It is right to sell Alitalia to Air France, because otherwise it will go bankrupt," Northern League leader Umberto Bossi told the demonstrators, the first time he has openly spoken in favour of a deal with the French carrier.

"But it is also right to safeguard Malpensa's workers," he added. Malpensa lies in Milan's Lombardy region, one of the Northern League's electoral heartlands.

Another party heavyweight, Roberto Maroni, said that if the centre right won an April election it would impose a "three-year moratorium" on the downsizing of Malpensa.

"If we win, Malpensa is safe," said Maroni, whose party is allied to Silvio Berlusconi's conservative bloc -- favoured by opinion polls to win the April 13-14 vote.

The Italian state is selling its 49.9 percent stake in Alitalia, which loses a million euros a day.

However, the collapse last month of Romano Prodi's centre-left government, which backed a takeover by Air France, has raised questions over whether the deal can go ahead.

The French airline said last week it would drop its offer without the support of Italy's new government.

The comments sent Alitalia's shares down 4 percent on Friday.

Further complicating the sale is a legal challenge to the exclusive talks between Alitalia and Air France by small domestic airline Air One. An Italian court has put a freeze on new developments until a hearing on Feb. 20.

during the 90s MXP was a little pavillion fully pigeons...

Milan airport suffered of an huge delay of realization...

that was the problem IMO.

now the Italian reality needs a two-hub system (FCO/MXP) with no competition, but actually is not economically possible...

:cheers:

Doesn't Alitalia already have a two hub system? Plus MXP would really benefit from a maglev system like they have in Shanghai. The Malpensa Express bus took forever to get to Milan the morning I took it last May. Later looking at the map I realized that MXP is just about as far as Bergamo is from Milan.


Also are people saying that Italy's geography makes Alitalia unprofitable? If someone wants to fly from Catania to Napoli or Palermo to Reggio di Calabria I doubt there are any direct flights.

I guess Italy has a transportation problem as a whole because my friend from Roma told me that I was lucky when I went to visit her. My train from Milan to Rome was only 12 minutes late, flight from FCO to CTA and back was on time with no strikes, and all the trains I took from Termini to FCO were running smoothly.

Doesn't Alitalia already have a two hub system? Plus MXP would really benefit from a maglev system like they have in Shanghai. The Malpensa Express bus took forever to get to Milan the morning I took it last May. Later looking at the map I realized that MXP is just about as far as Bergamo is from Milan.


Also are people saying that Italy's geography makes Alitalia unprofitable? If someone wants to fly from Catania to Napoli or Palermo to Reggio di Calabria I doubt there are any direct flights.

You can catch the train from the inside of the airport to the core of Milano, right close to the castle. Time: 35min.

On december 2008 you'll be able to get to the central station directly from the airport by train witout any change.

It's better to avoid the motorway expecially during the day.

You can catch the train from the inside of the airport to the core of Milano, right close to the castle. Time: 35min.

On december 2008 you'll be able to get to the central station directly from the airport by train witout any change.

It's better to avoid the motorway expecially during the day.

Really? That's good to know. I took the bus because when I went in May 2007 the train stopped somewhere else in the city (yes, the castle you're talking about) when I needed to get to Centrale. The Malpensa Express seemed to be the only direct way.

Are they building a new set of tracks to the station or doing a simple rerouting? How long would it take to get there? I hear people love Linate because it's very close so if you just had an extremely quick way to get from all the way from MXP to the city center it would be just like flying into Linate.

Really? That's good to know. I took the bus because when I went in May 2007 the train stopped somewhere else in the city (yes, the castle you're talking about) when I needed to get to Centrale. The Malpensa Express seemed to be the only direct way.

Are they building a new set of tracks to the station or doing a simple rerouting? How long would it take to get there? I hear people love Linate because it's very close so if you just had an extremely quick way to get from all the way from MXP to the city center it would be just like flying into Linate.


Yep, they are building new tracks from centrale joning the existing line to Malpensa. Time: I'm not sure but I guess 40-45 min... we'll see.

Btw, from Cadorna Station (current terminal of malpensa express train) you can use the unterground for 5 stations to reach Centrale.. It's useful (perhaps with few luggages :))

Linate: it's close to the city...served by urban bus and taxi (underground in the future)....much more comfortable..... I live at 15min from Linate so I can't say anything different :), but some people here in Italy say that Linate is a problem for Malpesa (it stoles flights to the hub)..Maybe yes, but I'm fond of Linate.

Greetings to Texas!!! (you are from Texas, am I wrong?)

Ricky

Italian right vows to delay Alitalia hub plans

MILAN, Feb 17 (Reuters) - The leaders of Italy's Northern League said on Sunday it was right to sell loss-making carrier Alitalia to Air France-KLM but vowed to put on hold for three years planned flight cuts from Milan's Malpensa airport.

Thousands of demonstrators gathered outside the airport to protest against Alitalia's and Air France's plan to downgrade Malpensa's hub status in favour of Rome.

Alitalia, which plans to cut its daily flights from Malpensa to 105 a day from 360 from April 1, is in exclusive talks to be bought by Air France-KLM. The airport is seeking $1.86 billion in damages from the airline.

"It is right to sell Alitalia to Air France, because otherwise it will go bankrupt," Northern League leader Umberto Bossi told the demonstrators, the first time he has openly spoken in favour of a deal with the French carrier.

"But it is also right to safeguard Malpensa's workers," he added. Malpensa lies in Milan's Lombardy region, one of the Northern League's electoral heartlands.

Another party heavyweight, Roberto Maroni, said that if the centre right won an April election it would impose a "three-year moratorium" on the downsizing of Malpensa.

"If we win, Malpensa is safe," said Maroni, whose party is allied to Silvio Berlusconi's conservative bloc -- favoured by opinion polls to win the April 13-14 vote.

The Italian state is selling its 49.9 percent stake in Alitalia, which loses a million euros a day.

However, the collapse last month of Romano Prodi's centre-left government, which backed a takeover by Air France, has raised questions over whether the deal can go ahead.

The French airline said last week it would drop its offer without the support of Italy's new government.

The comments sent Alitalia's shares down 4 percent on Friday.

Further complicating the sale is a legal challenge to the exclusive talks between Alitalia and Air France by small domestic airline Air One. An Italian court has put a freeze on new developments until a hearing on Feb. 20.
So in essence, it's a good business move, but, they are f*cking with it for politics.

Logical. :nuts:

I still fail to see how Milan is less attractive than Rome for the hub. :dunno:

So in essence, it's a good business move, but, they are f*cking with it for politics.

Logical. :nuts:

I still fail to see how Milan is less attractive than Rome for the hub. :dunno:

You must ask it to our roman politicians, to the roman union and to Alitalia's employees :bash:

NB. "roman" doesn't mean ROMA as a city, but a peculiar way to do politic (it's difficult to explain, sorry).

Cheers

You must ask it to our roman politicians, to the roman union and to Alitalia's employees :bash:

NB. "roman" doesn't mean ROMA as a city, but a peculiar way to do politic (it's difficult to explain, sorry).

Cheers
I think I understand what you mean. ;)

http://www.avionews.com/small_photo.php?photoId=7611
Rome, Italy - The meeting in Paris two days ago
(WAPA) - The future of AZ Service is among the points of conflicts between Air France-KLM and Alitalia in the takeover talks. The negotiations have got bogged down following the Italian Union's opposition, and for this reason the French-Dutch President, Jean-Cyril Spinetta, would be ready to postpone the meeting in Italy forecast for the next week.

The Paris meeting of two days ago between the management of the two companies would have not given the forecast results.

(Avionews)

Alitalia's debt at end Jan rises 6.8 pct

MILAN, Feb 29 (Reuters) - Italian carrier Alitalia on Friday said its net debt at the end of January stood at 1.28 billion euros ($1.95 billion), up 6.8 percent from a month earlier.

The unprofitable airline had cash and financial credits for 282 million euros at the end of January, down 23 percent from a month earlier, Alitalia said in a statement.

You must ask it to our roman politicians, to the roman union and to Alitalia's employees :bash:

NB. "roman" doesn't mean ROMA as a city, but a peculiar way to do politic (it's difficult to explain, sorry).

Cheers

Or maybe you must ask that to Lombard politicians, who weren't even able to shut down Milan city airport in order to concentrate all commercial traffic to Malpensa?

Berlusconi now says open to Alitalia takeover

ROME, March 5, 2008 (AFP) - Italy's centre-right leader Silvio Berlusconi said Wednesday he could accept an Air France-KLM purchase of struggling flag carrier Alitalia if the airline were able to retain its national character.

"I think it's possible to envision a public company with Alitalia, Air France and KLM, so long as Alitalia remained a national company with the Italian flag on the planes and offices across the world," Berlusconi said.

He told Rai Uno television that "a state contribution" might be necessary to achieve such a goal.

Alitalia is in negotiations for a sale to Air France-KLM although a final decision in the long-running saga over its future will be taken by the new Italian government formed after the April 13-14 polls.

Berlusconi's comments appeared to signal a change from the previous day, when he said Italy should not sell off its national assets.

"It is a serious problem and I am very critical of the course that has been taken. Italy should not be selling off such national companies," Berlusconi told Sky TG24 television on Tuesday.

The two-time former premier, who is hoping to return to power in April, had said he favoured an offer from Italian businessmen. Alitalia's local rival Air One recently said it was prepared to put a new offer on the table.

Alitalia stock fell by 5.5 percent on Tuesday following Berlusconi's comments.

Centre-left leader Walter Veltroni on Wednesday criticised Berlusconi's "hasty" comments and said the company should be sold "according to the rules of the market".

Or maybe you must ask that to Lombard politicians, who weren't even able to shut down Milan city airport in order to concentrate all commercial traffic to Malpensa?

City VS City....even here:ohno:

City VS City....even here:ohno:...that's the Macaroni way. Italy is doomed, if things don't change radically. A good start could be if Alitalia gets overturned and sold to Air France or any other serious (that is, foreign) operator. This is the only way we can get an usable air service in Macaronia.

Or maybe you must ask that to Lombard politicians, who weren't even able to shut down Milan city airport in order to concentrate all commercial traffic to Malpensa?

Of course also lombars politicians have to blame. As ever they woke up too late!

"Central" ones have been more brighter (in their own interests).

Italian court throws out Air One case for Alitalia bid: reports

MILAN, March 11, 2008 (AFP) - A top court has thrown out Italian carrier Air One's suit to get takeover talks between troubled peer Alitalia and Air France-KLM suspended, Ansa and Radiocor news agencies reported Tuesday.

Air One had appealed to Italy's State Council, or top administrative court, after a lower tribunal rejected its case that the government should not have approved exclusive takeover talks between Alitalia and Air France-KLM.

The reasoning for the high court ruling will be made public in several days, the news agencies said.

On Monday, Air France-KLM said it would submit a formal offer for Alitalia on Thursday.

Following months of twists, Alitalia in January opened exclusive talks with Air France-KLM to reach an accord on the sale of the government's 49.9 percent stake in the chronically loss-making Italian carrier.

Outgoing Prime Minister Romano Prodi championed the sale but the outcome was clouded when his government collapsed shortly afterwards and new elections were called for April.

It was already opposed by many politicians, especially on the right, and former premier Silvio Berlusconi has raised questions about the sale of valuable state owned assets as the country prepares to vote.

The government has been trying for more than a year to sell Alitalia, reported to be losing around one million euros (1.5 million dollars) a day, but there have been continuous delays.

A tender last year that included Air One but not Air France, which already owns two percent of Alitalia, collapsed in July when all credible buyers pulled out.

The final decision on Alitalia's future will rest on the government elected at the April polls.

I think Air France-KLM would be the best choice for Alitalia. Air France-KLM is a highly profitable air company. Air France showed respect towards KLM and the homebase Amsterdam Airport Schiphol. It is only not officially dutch anymore, which hurts a little bit. Alitalia is in a bad situation that needs a lot of help, which Air France-KLM can give better than any other airline.

I think Air France-KLM would be the best choice for Alitalia. Air France-KLM is a highly profitable air company. Air France showed respect towards KLM and the homebase Amsterdam Airport Schiphol. It is only not officially dutch anymore, which hurts a little bit. Alitalia is in a bad situation that needs a lot of help, which Air France-KLM can give better than any other airline.

unfortunately in the northern italy they don't think this way...

I think Air France-KLM would be the best choice for Alitalia. Air France-KLM is a highly profitable air company. Air France showed respect towards KLM and the homebase Amsterdam Airport Schiphol. It is only not officially dutch anymore, which hurts a little bit. Alitalia is in a bad situation that needs a lot of help, which Air France-KLM can give better than any other airline.

There is the risk that management will be distracted from running the existing business if the take-over goes ahead. I do not know the details of the issues, but if Alitalia's troubles could not be sorted out as a standalone airline, will it be easier to do it as part of a merged operation?

Alitalia accepts Air France offer

Troubled Italian carrier Alitalia has agreed to be bought by rival Air France for a cut-price 138m euros(£106m:$215m) in a move to save the state airline.
The Italian government, which holds 49.9% of Alitalia, failed to sell the company by auction in 2007.

Alitalia has lost money for five years, and has struggled to clinch a buyout.

Air France-KLM offered one share per 160 Alitalia shares, valuing Alitalia at a low-value 0.10 euros a share.

That is a 81% reduction on Alitalia's current share price.

The offer includes plans for a 1bn euro capital injection by the Franco-Dutch airline, which says it will also pay 608m euros to buy back Alitalia bonds.

The proposed purchase could become a hot topic in Italy's general election, being held on 13 and 14 April.

'National leader'

Alitalia, which is struggling under 1.2bn euros of debt, is hoping the tie-up will generate significant savings.

There are a number of hurdles to be overcome before the deal is sealed. Air France-KLM are seeking support for the move from Italian trade unions.

The Italian government must also agree to sell its shares, and the country's stock market and European Union competition regulators must also give their backing.

Air France-KLM has a restructuring plan for Alitalia to enable it "to rediscover the means of its development and to consolidate its status as a national leader".

And it said Alitalia will maintain its national identity within the Air France-KLM group after the takeover, which could be completed by mid-2008.

http://news.bbc.co.uk/2/hi/business/7299203.stm

Fire sale ...

Fire sale ...

lt' s a real shame :bash:

The Unions have rejected the planned job cuts:

http://news.bbc.co.uk/1/hi/business/7304185.stm

^^

and the next right coalition will refuse the suicide AF conditions too

Air France-KLM takeover of Alitalia abandoned:
http://news.bbc.co.uk/1/hi/business/7326320.stm

Air France-KLM takeover of Alitalia abandoned:
http://news.bbc.co.uk/1/hi/business/7326320.stm
Good news for AF/KLM and bad news for Alitalia's workers.
Maybe will Berlusconi buy Alitalia for less than AF/KLM's proposal ?

I guess this is not totaly a bad news for the Italian economic system, the Italian pride and especially for our airports (Fiumicino but above all Malpensa).

There'll be a solution, with the intervention of private investors and hopefully without public money.

11th hour or not:
http://news.bbc.co.uk/1/hi/business/7327762.stm

I wonder which will be the next European national carrier to get into these kind of differculties?

Alitalia crashing after years of inertia:
http://news.bbc.co.uk/1/hi/business/7328319.stm

'Short term' survival at Alitalia:
http://news.bbc.co.uk/1/hi/business/7336141.stm

It helps if you have got a powerful friend:
http://news.bbc.co.uk/1/hi/world/europe/7347618.stm

Air France walks away:
http://news.bbc.co.uk/1/hi/business/7359866.stm

^^

and LH is backing...

^^

and LH is backing...

Air France was the last party involved in a bid; Lufthansa decided not to make an offer back in June 2007.

The latter was particularly interested in landing slots at Milan, and I think it is in their interest to see Alitalia collapse rather than to buy into it.

Update:
And now trading in its shares have been suspended:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOlSibvlvBwA

Berlusconi wants to give a loan to Alitalia, is that allowed by the EU? I thought this kind of preferential treatment was forbbiden