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Old May 31st, 2008, 12:49 PM   #281
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Quote:
Originally Posted by Dinivan View Post

huh?? does it mean the company is being given 300 million euros for free?
It is a loan that Alitalia will have to pay back in the futur.
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Old May 31st, 2008, 02:28 PM   #282
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Quote:
Originally Posted by eomer View Post
It is a loan that Alitalia will have to pay back in the futur.
Yes it was made as a loan, but it will be illegal unless the EU Commission says otherwise. The money loaned to the company was then used to bolster the capital of the company so that it could continue to operate legally and as a prerequisite to the accounts being signed-off.

At present, Alitalia is getting preferential treatment over privately owned airlines operating in the Italian market which is anti-competitive.
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Old May 31st, 2008, 11:15 PM   #283
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I don't know...a collapse and afterwards a fresh start might be just what the Italian aviation industry needs. Just look at Swissair -> Swiss and Sabena -> Brussels Airlines. This way they can probably also get rid of all their unions, who are one of the main reasons Alitalia is unprofitable right now.
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Old June 1st, 2008, 03:22 PM   #284
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Originally Posted by [email protected] View Post
I don't know...a collapse and afterwards a fresh start might be just what the Italian aviation industry needs. Just look at Swissair -> Swiss and Sabena -> Brussels Airlines. This way they can probably also get rid of all their unions, who are one of the main reasons Alitalia is unprofitable right now.
You are probably right.
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Old June 4th, 2008, 10:39 PM   #285
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Alitalia's main Italian competitor is to move into the long-haul market:
http://www.bloomberg.com/apps/news?p...d=aNvuPuGNd3Dg


... while BA sticks the boot in:

"It's very clear to us that this is a case of state aid -- everyone sees it that way. We're against it. It's an issue of credibility for Europe, certainly for the commission."

http://www.bloomberg.com/apps/news?p...d=axCd03QCuAG8

Last edited by Magellan; June 4th, 2008 at 10:46 PM.
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Old June 9th, 2008, 08:34 PM   #286
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"Six of Europe's leading airlines have joined together to press the European Commission's transport commissioner to oppose the Italian government's recent financial bailout of Alitalia ..."
http://www.uk-airport-news.info/heat...ews-080608.htm
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Old June 12th, 2008, 06:08 AM   #287
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Crash and Burn

Alitalia is give a further month by the EU to supply more relevant information about the 300 Million Euro loan:
http://www.bloomberg.com/apps/news?p...d=aUv.A4YQTvaI


Unless the Italian Government is more forthcoming with the EU, the EU inquiry into the loan will likely find that it was illegal state aid:

"As Alitalia has already benefited from rescue and restructuring aid (in 2001), Italy cannot, in principle, grant it any more aid."

http://www.bloomberg.com/apps/news?p...d=arJEyhL2vQ0s


However, it may be relevant to ask why the EU has decided to be lenient on the Italian Government when the latter failed to provide full details in advance of making the loan to Alitalia as it is required to do, and then failed to provide the details by the May deadline. Is it anything to do with the EU Transport Minister being a member of the Italian ruling party?

The EU Commissioner would be unable to stop the process, but he may be acting to buy time for the Italian Government so that it can arrange a fire sale at a knock down price, and then deal with the issue of the loan afterwards. The 300 Million Euro loan was used to meet the company's legal capitalisation obligations before the accounts could be approved, and so is not available for operations as the article may suggest.

The Italian Government therefore has to act very fast since, based on previous statements of the company's available funds, and its rate of consumption of those funds, Alitalia is likely to go bust by the end of June unless there is a further cash injection. However, the opening of the EU inquiry will now make it harder to finalise any agreement with a potential buyer, if there are any, since they would likely have to repay the loan and take on the obligation themselves plus fill the hole in the operating funds. There is also now the risk of legal action from Alitalia's competitors.

Meanwhile the airline's PAX figures for April 2008 dropped by 26% (down 13% in 2008 Q1) with the load factor down 10%. The airline made cuts recently in unprofitable routes, mainly affecting Milan Malpasa, but the decline in traffic represents a more significant drop off than can be attributed to those cuts. So while all this is going on, the value of the company is declining.

Trading in shares is suspended indefinitely. Shares closed at EUR 0.44 which capitalises the company at just over 600 Million Euros. However, trading was suspended before the above passenger figures were published and before it was announced that Alitalia had lost 495 Million Euros in 2007, so it is probably worth more for its assets than as a going concern.

There have been no takers so far, so I wonder if a sale at a token price of say 1 Euro is now in the offing?

Update:
Separately, the European Court of Justice announced it will rule on July 9 on whether financing provided to Alitalia in 2001 constituted illegal state aid.

Last edited by Magellan; June 12th, 2008 at 06:50 AM.
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Old June 14th, 2008, 05:56 AM   #288
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Alitalia chairman says government loan was in line with EU rules
11 June 2008
Agence France Presse

The Italian government's 300 million euro (465 million dollar) loan to Alitalia is in line with EU law, the chairman of the Italian flag carrier said Wednesday.

"Whether it was by the previous government or the current government, the funds are compatible with EU law," Aristide Police said.

The European Commission launched on Wednesday an illegal state aid probe into the government loan.

The European Union's top competition watchdog warned that "at this stage" it believed that the loan, which Alitalia has the option of converting into equity capital, was "incompatible" with EU state aid rules.

"It's not a coincidence that it was called a bridging loan," Police said. "It is not aid, it's a loan with terms and pretty high interest rates."

The loan was made in the last days of the centre-left government of Romano Prodi shortly after Silvio Berlusconi won mid-April elections.

It is "even less illegitimate aid, but an instrument to help the privatisation succeed, to be within the market and not outside with a state subsidy," Police said.

The commission said that because Alitalia had in the past benefited from state bailouts, Italy could not "in principle" grant it any more aid, despite the cash-strapped company's increasingly perilous situation.

Spokesman Mark English said that the commission had up to a maximum 18 months to carry out its investigation and that in the meantime Alitalia could use the funding.

The commission said its probe into the loan would focus on whether it was made on the same terms as a private investor and would allow all interested parties to voice their opinion.

Rival airlines such as Iberia and British Airways have condemned the loan and Air France-KLM chairman Jean-Cyril Spinetta has said the Italian carrier needed an "exorcist" to save it from bankruptcy.
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Old June 16th, 2008, 02:10 PM   #289
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Quote:
Originally Posted by hkskyline View Post
Alitalia chairman says government loan was in line with EU rules
11 June 2008
Agence France Presse

The Italian government's 300 million euro (465 million dollar) loan to Alitalia is in line with EU law, the chairman of the Italian flag carrier said Wednesday.

"Whether it was by the previous government or the current government, the funds are compatible with EU law," Aristide Police said.

The European Commission launched on Wednesday an illegal state aid probe into the government loan.

The European Union's top competition watchdog warned that "at this stage" it believed that the loan, which Alitalia has the option of converting into equity capital, was "incompatible" with EU state aid rules.

"It's not a coincidence that it was called a bridging loan," Police said. "It is not aid, it's a loan with terms and pretty high interest rates."

The loan was made in the last days of the centre-left government of Romano Prodi shortly after Silvio Berlusconi won mid-April elections.

It is "even less illegitimate aid, but an instrument to help the privatisation succeed, to be within the market and not outside with a state subsidy," Police said.

The commission said that because Alitalia had in the past benefited from state bailouts, Italy could not "in principle" grant it any more aid, despite the cash-strapped company's increasingly perilous situation.

Spokesman Mark English said that the commission had up to a maximum 18 months to carry out its investigation and that in the meantime Alitalia could use the funding.

The commission said its probe into the loan would focus on whether it was made on the same terms as a private investor and would allow all interested parties to voice their opinion.

Rival airlines such as Iberia and British Airways have condemned the loan and Air France-KLM chairman Jean-Cyril Spinetta has said the Italian carrier needed an "exorcist" to save it from bankruptcy.
He would say that would n't he. Fortunately the whole EU Commission has to be satisfied that the terms of the loan are legal.
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Old July 14th, 2008, 07:09 AM   #290
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Alitalia's future is continuing business -chair

ROME, July 11 (Reuters) - A plan for Alitalia's future is not being constructed around a bankruptcy or by putting debts into a separate entity, Chairman Aristide Police said on Friday.

Intesa Sanpaolo is working on a rescue strategy for the ailing airline, which ultimately failed to find a buyer when it was put up for sale by the government 18 months ago.

Newspapers have suggested Intesa Sanpaolo's plan might call for a change to one of Italy's bankruptcy laws or putting Alitalia's debts into a separate "bad company" and bringing investment into the operational activities.

On Thursday, Transport Minister Altero Matteoli said it was too early to talk of changes to financial failure laws in the case of Alitalia, before Intesa Sanpaolo had presented its plan.

"I stand by the statement of the minister who spoke of a solution around continuing the business," Police told journalists on the sidelines of a conference.

Industry Minister Claudio Scajola said on Wednesday the law would be changed to adapt to the situation of "some big companies in crisis," but Matteoli said the government was in agreement to wait until Intesa Sanpaolo had completed its work.

Intesa Sanpaolo is due to complete its plan by early next month for the national airline, which is losing over a million euros a day.

Its shares have been suspended from trading for over a month.
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Old July 16th, 2008, 06:03 PM   #291
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A dead duck?

The unions seem to think that Alitalia's main Italian competitor should save themselves and the Company through a merger, while also thinking very little of Berlusconi's promises made during the election campaign:
http://www.bloomberg.com/apps/news?p...d=aqOQC_uC5cAs


Meanwhile there seems to be little support for the Italian Government's attempts to save the airline amongst its own electorate:
http://www.bloomberg.com/apps/news?p...d=ahNJN_9r713g


The European Court ruling on the 9th July regarding a previous loan to Alitalia effectively confirms that the recent 300 Million Euro loan was illegal (the EU's consent to the previous loan included terms barring further loans being made by the Italian Government to Alitalia within the next 10 years). This decision will further deter any potential investors from risking their money in the company:
http://www.bloomberg.com/apps/news?p...d=aRbey8L4h.aA


The Government seems to be preparing for the inevitable bankruptcy:
http://www.bloomberg.com/apps/news?p...d=aFsdTvz47hy4

... but the Chairman of the airline is still in a state of denial, or is it just that he is no longer in the loop?:
http://www.bloomberg.com/apps/news?p...d=auAKJFU6fZoE


By my reckoning the company's cash funds ran out around the end of June, and so it is probably in effect already bankrupt. I wonder if accounts are still being settled and if the employees are expecting to be paid at the end of the month?
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Old July 26th, 2008, 09:15 AM   #292
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Alitalia faces bankruptcy choice as board meets

ROME, July 25 (Reuters) - Troubled Italian carrier Alitalia will have to decide whether to relaunch via a bankruptcy filing or pursue another option when its board meets Saturday, as its third attempt at finding a buyer sputters to a close.

Alitalia is still flying thanks to an emergency government loan after a planned sale to Air France-KLM fell apart earlier this year, but an oil price surge and a sharp fall in bookings have compounded its long list of troubles.

Prime Minister Silvio Berlusconi said on Friday that news agency reports the government was planning to put the company into extraordinary administration, a way of protecting it from creditors, were "totally groundless."

The airline loses more than 2 million euros a day, and was worth just under $1 billion on the market before its shares were suspended in June after Italy relaunched the sale process.

Latest figures showed the airline's passenger traffic fell 22 percent in May as it cut capacity and travellers fretted about its uncertain future.

Alitalia's board will meet on Saturday, when Chairman Aristide Police will ask its controlling shareholder -- the Italian Treasury -- to declare whether the airline should remain in business, a political source said.

"The chairman will ask the Treasury representative to reconfirm the existence of conditions for continuing business or he'll act accordingly and file for bankruptcy," the source said.

Berlusconi promised earlier on Friday that Italy was close to resolving Alitalia's fate.

"I'm working on it ... For now, we have two things: the necessary capital and the slogan 'I love Italy, I fly Alitalia'," he said.

AVOIDING BANKRUPTCY

The government, which owns a 49.9 percent stake in Alitalia, appears to be in favour of avoiding the bankruptcy option, political and union sources say, despite a widely reported rescue plan by adviser Intesa Sanpaolo that would require it.

Those sources say the government has agreed to give turnaround expert Rocco Sabelli the power to carry out Intesa's plan, but without pursuing bankruptcy, and one union source said the decision could be announced as early as next week.

Under Intesa's plan, a bankruptcy filing would be followed by splitting off the airline's healthy units in which investors could put in as much as 800 million euros, Italian media say.

That plan however, would not be legal unless the government modified Italian bankruptcy law -- a move that development minister Claudia Scajola does not rule out. Intesa and Alitalia would not confirm the plan.

Smaller Italian airline Air One's chief Carlo Toto -- who has long sought to buy Alitalia but was rejected in favour of Air France-KLM, has confirmed his willingness to be part of the investor group, a source familiar with the discussions said.

Italian media have speculated other investors could include wealthy Italian business families like the Benettons and Fossatis and private equity firm Clessidra.

This is the third attempt by the Italian government to sell Alitalia in less than 20 months. An initial auction for the government's stake fell apart last year when all bidders pulled out, while unions scuppered the sale to Air France-KLM.
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Old July 29th, 2008, 05:02 PM   #293
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Alitalia shares downgraded

"... Citigroup downgraded the stock to ``sell/speculative'' from ``sell/high risk,'' citing ``continuing heavy losses'' and the failure to sell the company to Air France. The analysts also trimmed their share-price estimate to 7 euro cents from 45 cents. Alitalia shares closed at 44.5 euro cents on June 3, before being suspended from trading pending a sale. The shares have not resumed trading. ..."

http://www.bloomberg.com/apps/news?p...d=aqDhLXHNBLB0
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Old July 29th, 2008, 05:59 PM   #294
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With all this bad news for Alitalia, I don't see it going anywhere. The Italian government will keep it alive. With that said I LOVE Alitalia, it's a great airline.



I thought I read somewhere that they got rid of their two hub system (Malepensa, Fiumicino) but I think it would really help if they had maglev systems going to the center of the city. It takes a ridiculous amount of time to get to the city center by bus or train for both airports.
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Old July 29th, 2008, 06:47 PM   #295
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Originally Posted by FM 2258 View Post
With all this bad news for Alitalia, I don't see it going anywhere. The Italian government will keep it alive. With that said I LOVE Alitalia, it's a great airline.



I thought I read somewhere that they got rid of their two hub system (Malepensa, Fiumicino) but I think it would really help if they had maglev systems going to the center of the city. It takes a ridiculous amount of time to get to the city center by bus or train for both airports.
I think Alitalia has effectively pulled out of Milan as of Q1 this year - which resulted in a larger than expected drop-off in passengers and load factors.

I think one of the previous posts highlighted that there is little/only minority support for Alitalia amongst the Italian travelling public; many would prefer to see the airline go to the wall rather than have the government waste more money on it. That said, yes there is a matter of national pride involved which still seems to be in denial so the saga probably still has a way to run, though it will start to come to a head this week if the bank finally announces it's rescue proposals (which seem to have been delayed again due to comments from the PM and the Alitalia Board).

Last edited by Magellan; July 29th, 2008 at 06:53 PM.
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Old July 30th, 2008, 08:23 PM   #296
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Chickens coming home to roost

Berlusconi may be about to take a lot of flake for the plight of Alitalia. The Board is holding a second (in five days) extraordinary meeting today (Wednesday) with Bank Intesa Sanpaolo reported to be presenting an outline of its proposed rescue plan. It is anticipated that this amounts to bankruptcy and the layoff of 40% of the workforce as the starting point. The airline would then be broken up so that the 'healthy' parts of the business can be sold off, and the rest bined.

http://uk.reuters.com/article/rbssTe...72831220080730


Air One has been targeted by rumours as a potential buyer of the airline, but, Gilberto Benetton, a key player in any rescue plan has indicated that he believes an international partner is required as part of any realist rescue plan. He has also indicated today (Wednesday) that "no concrete proposal has yet been made", thus throwing into question Berlusconi's recent comments (if there was not already sufficient reason to question all of his comments on the topic).

http://uk.reuters.com/article/rbssTe...56846320080730


The unions are threatening strike action in response to any lay-offs, but with the Government's preferred solution of pumping in additional funds to postpone the inevitable this time being blocked by the EU Commission, confrontation and grounded aircraft is on the cards. There is however little public support for Alitalia, with Berlusconi's marketing phase for the 'rescued' airline - "I love Italy, I fly Alitalia" - being morphed into "Alitalia flies, Italy pays."

Political impact:
http://uk.reuters.com/article/rbssIn...04779120080730


So who would buy the 'healthy' bits when most of the potential buyers could now probably divide up the remaining business between themselves by reallocating their existing resources and thus avoid the pains of integrating a worn out business?
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Old August 5th, 2008, 06:55 PM   #297
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Italian PM promises Alitalia 'miracle': report
5 August 2008
Agence France Presse

Italian Prime Minister Silvio Berlusconi has promised a "miracle" to save cash-strapped national airline Alitalia from bankruptcy, according to an interview released on Tuesday.

Berlusconi told the weekly magazine Chi that a rescue plan to save Alitalia would be announced soon.

"We are working. We will perform another miracle and will offer Italy a profitable national company," he said in an extract released by the magazine.

The Italian government said late last month it had pulled together enough funds to rescue the airline, which has been surviving on a loan of 300 million euros (471 million dollars) made in late April from public funds after talks for Air France-KLM takeover collapsed.

The bank Intesa Sanpaolo had been given the task of drafting a rescue plan for the airline by August 1.

Press reports have said the proposals call for dividing the company in two to allow for the creation of a new entity for profitable operations and a second one to deal with debts and less profitable activities.

Such a scheme could lead to the elimination of 4,000 to 10,000 jobs, according to some reports.

State-controlled Alitalia employs 11,100 people in airline transportation while 8,300 work in maintenance for AZ Servizi, controlled by a public holding company.

It recorded pre-tax losses of 215 million euros in the first quarter of this year.
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Old August 8th, 2008, 05:30 PM   #298
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Alitalia passenger traffic falls 21.7 pct in June

ROME, Aug 8 (Reuters) - Passenger traffic at Alitalia slumped by more than a fifth in June from a year earlier, according to the Association of European Airlines (AEA), compounding the problems of the loss-making airline which Italy is trying to sell.

The AEA said Alitalia had 16.4 percent fewer passengers in the first six months of the year than the first half of 2007.

While the AEA said the overall June figures reflected the "depressed situation" of the European market, Alitalia's passenger drop was much sharper than the region-wide fall of 0.1 percent for June.

Air France-KLM, a former suitor for Alitalia, fell only 0.1 percent, British Airways slipped 2.8 percent with Iberia tumbling 14.2 percent.

The data emerged as Prime Minister Silvio Berlusconi tries to talk up the possibility of a rescue bid for Alitalia, whose sale to Air France-KLM failed last year but is now reported to be closer to an alliance with Lufthansa .

"We are in talks with a big foreign company for an alliance on an international level, exactly the opposite of the hypothesis of the fire sale to Air France-KLM, which the previous government wanted, which among other things, included 7,000 job cuts," Berlusconi told local TV late on Thursday.

News agency AGI said Lufthansa could become an investor in a reshaped Alitalia with a 20-25 percent stake. The Italian state put up for sale its 49.9 percent stake in Alitalia in late 2006.

The airline has posted an annual operating loss every year since 1999 and loses around a million euros a day. It is kept in the air by a 300 million euro government loan which the European Commission is probing as possible illegal state aid.

Air France had planned 2,100 jobs cuts at Alitalia and more redundancies at its ground service unit as part of a bid that fell apart over union resistance and criticism from Berlusconi, who was then campaigning for the April election.

Italy has tasked adviser Intesa Sanpaolo with drawing up a new rescue plan, which is expected to suggest putting Alitalia under special administration and then splitting off its healthy parts for new investors and seeking an international alliance.
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Old August 17th, 2008, 06:37 AM   #299
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Quote:
Originally Posted by hkskyline View Post
Italian PM promises Alitalia 'miracle': report
5 August 2008
Agence France Presse

Italian Prime Minister Silvio Berlusconi has promised a "miracle" to save cash-strapped national airline Alitalia from bankruptcy, according to an interview released on Tuesday.

Berlusconi told the weekly magazine Chi that a rescue plan to save Alitalia would be announced soon.

"We are working. We will perform another miracle and will offer Italy a profitable national company," he said in an extract released by the magazine.

The Italian government said late last month it had pulled together enough funds to rescue the airline, which has been surviving on a loan of 300 million euros (471 million dollars) made in late April from public funds after talks for Air France-KLM takeover collapsed.

The bank Intesa Sanpaolo had been given the task of drafting a rescue plan for the airline by August 1.

Press reports have said the proposals call for dividing the company in two to allow for the creation of a new entity for profitable operations and a second one to deal with debts and less profitable activities.

Such a scheme could lead to the elimination of 4,000 to 10,000 jobs, according to some reports.

State-controlled Alitalia employs 11,100 people in airline transportation while 8,300 work in maintenance for AZ Servizi, controlled by a public holding company.

It recorded pre-tax losses of 215 million euros in the first quarter of this year.
More political spin for the Italian consumption - nothing of substance to this.
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Old August 17th, 2008, 07:06 AM   #300
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Alitalia passenger traffic falls 21.7 pct in June

ROME, Aug 8 (Reuters) - Passenger traffic at Alitalia slumped by more than a fifth in June from a year earlier, according to the Association of European Airlines (AEA), compounding the problems of the loss-making airline which Italy is trying to sell.

The AEA said Alitalia had 16.4 percent fewer passengers in the first six months of the year than the first half of 2007.

While the AEA said the overall June figures reflected the "depressed situation" of the European market, Alitalia's passenger drop was much sharper than the region-wide fall of 0.1 percent for June.

Air France-KLM, a former suitor for Alitalia, fell only 0.1 percent, British Airways slipped 2.8 percent with Iberia tumbling 14.2 percent.

The data emerged as Prime Minister Silvio Berlusconi tries to talk up the possibility of a rescue bid for Alitalia, whose sale to Air France-KLM failed last year but is now reported to be closer to an alliance with Lufthansa .

"We are in talks with a big foreign company for an alliance on an international level, exactly the opposite of the hypothesis of the fire sale to Air France-KLM, which the previous government wanted, which among other things, included 7,000 job cuts," Berlusconi told local TV late on Thursday.

News agency AGI said Lufthansa could become an investor in a reshaped Alitalia with a 20-25 percent stake. The Italian state put up for sale its 49.9 percent stake in Alitalia in late 2006.

The airline has posted an annual operating loss every year since 1999 and loses around a million euros a day. It is kept in the air by a 300 million euro government loan which the European Commission is probing as possible illegal state aid.

Air France had planned 2,100 jobs cuts at Alitalia and more redundancies at its ground service unit as part of a bid that fell apart over union resistance and criticism from Berlusconi, who was then campaigning for the April election.

Italy has tasked adviser Intesa Sanpaolo with drawing up a new rescue plan, which is expected to suggest putting Alitalia under special administration and then splitting off its healthy parts for new investors and seeking an international alliance.
Lufthansa was told by its bankers last year that an investment in Alitalia was seen as too risky and would lead to a down-grading of Lufthansa's credit rating. If there is any change in their position, I am sure that it would be towards a stronger warning against any financial involvement. Lufthansa has also indicated that Austrian is high up in its priories while Alitalia is only being monitored for developments. Lufthansa do not need Alitalia anyway; they could probably capture a significant part of the Italian market through their SWISS operation.

Intesa Sanpaolo's rescue proposal is reputed to have suggested a reverse take-over of Air One so as to get hold of the latter's more modern fleet and new aircraft deliveries. The merged airline would jettison some Air One routes and probably a large proportion of the latter's staff and would end up with over 60% of the Italian domestic market.

There are a whole load of questions and issues that arise with this proposal which is probably why the details have not been published. There is also a divide between factions of the Government and at the top of Alitalia over this proposal even before the EU Commission raises any competition and regulation concerns.

Still no solid plan announced.

Meanwhile an Italian Consumer group reports that Alitalia has cost the Italian public 5.2 billion Euros over the last 10 years:
http://www.bloomberg.com/apps/news?p...d=a0WOxiFFvLLs
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