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Old September 13th, 2004, 10:05 PM   #1
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✈ | AP/AZ™/BV/GJ/IG/NO | Italian-Based Carriers

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



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)
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Old September 14th, 2004, 09:45 AM   #2
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Its quite sad actually.......I hope Alitalia will somehow resolve their financial problems....
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Old September 14th, 2004, 07:13 PM   #3
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Alitalia unions demand government talks
By Tony Barber in Rome
Published: September 13 2004 17:52 | Last updated: September 13 2004 17:52



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.
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Old September 18th, 2004, 10:03 PM   #4
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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.
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Old September 20th, 2004, 12:35 AM   #5
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Sunday September 19, 8:43 PM
EU transport chief hails Alitalia accord



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.
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Old September 22nd, 2004, 08:24 AM   #6
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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.
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Old September 23rd, 2004, 10:54 AM   #7
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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).
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Old September 23rd, 2004, 11:10 AM   #8
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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....
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Old September 24th, 2004, 06:34 AM   #9
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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
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Old September 28th, 2004, 10:36 PM   #10
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Wednesday September 29, 2:02 AM
Alitalia says October 5 is deadline for job payoff deal



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.
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Old October 2nd, 2004, 11:33 PM   #11
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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.
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Old October 7th, 2004, 12:42 AM   #12
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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."
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Old October 14th, 2004, 07:40 PM   #13
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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.
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Old October 17th, 2004, 05:28 AM   #14
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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.
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Old April 27th, 2005, 01:48 PM   #15
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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.
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Old May 4th, 2005, 04:08 AM   #16
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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.
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Old May 27th, 2005, 07:38 PM   #17
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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; [email protected]

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.
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Old June 4th, 2005, 06:18 AM   #18
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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.
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Old June 4th, 2005, 10:07 AM   #19
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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.
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Old June 4th, 2005, 05:42 PM   #20
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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.
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