Turbulent future for loss-making Alitalia after rescue stalls

Author: 
AFP
ID: 
1575177149081824900
Sun, 2019-12-01 03:27

ROME: Efforts to save loss-making Alitalia have reached an
impasse after months of unsuccessful negotiations with potential
buyers, leaving Italy’s government undecided on the next
move.
The struggling carrier, which has been under special administration
since 2017 and continues to burn through cash, is now at a
standstill after a consortium of potential buyers failed to make an
offer, and with little hope for one in sight.
“It’s evident that right now a business solution doesn’t
exist,” Economy Minister Stefano Patuanelli said this week,
addressing a Senate commission.
The company “has a dimension that the market has difficulty
accepting,” he said.
The government has reportedly said it will provide a €400 million
($440 million) bridge loan to the struggling company — at the
risk of running afoul of European Commission rules on state aid,
after the 900 million provided already in 2017.
Patuanelli brushed off such concerns Friday, saying he was “not
worried.” The government, he said, was exploring its options,
which media reports said include replacing the commissioners
running the airline, or outright nationalization.
The minister has said placing the beleaguered carrier in the
state’s hands “would not necessarily be negative.”
Alitalia has been losing money for years, its business squeezed by
competition from low-cost carriers, fuel price rises, and luxury
airlines from the Middle East.
After months of negotiations and the expiration of the latest
deadline for a binding bid, plans for a consortium of investors to
save the airline fell through last week after Atlantia said the
conditions had not yet been met to participate.
Atlantia, a major operator of toll expressways and airports
controlled by the Benetton family, operates Rome’s airports and
had already twice taken stakes in Alitalia.
Others making up the potential partnership were state railway
Ferrovie dello Stato, US airline Delta and the Italian
treasury.
Delta said earlier this month it was ready to invest up to €100
million in Alitalia in return for a 10 percent stake.
Lufthansa has its eye on the lucrative Italian market but has said
it would only be interested in investing in a restructured
Alitalia.
Patuanelli said Friday that Lufthansa at the moment was interested
in “a commercial partnership, but with no equity investment.”
The minister has said costs must be cut at the carrier, echoing
Lufthansa’s demands for restructuring.
Unions have planned a December 13 strike, their worries mounting
given the lack of a new plan in sight and uncertainty over how many
jobs could be threatened under any restructuring.
“We are against any idea of cutting up Alitalia and losing our
country’s heritage,” the secretary of the CGIL union said on
Friday.
Alitalia was placed under special administration two years ago
after workers rejected a restructuring plan that would have laid
off 1,700 workers out of some 11,000.
Estimates are hard to come by on how much the state would have to
spend to keep it afloat. The Sole 24 Ore daily put the sum at 8.7
billion euros, citing Italian investment bank Mediobanca.
The company’s best, or least bad, year in the past decade was
2011, when it lost some €69 million, a sum that swelled to €280
million the following year and to €580 million in 2014, according
to Italian news agency AGI.
“The abnormality about Alitalia is that it loses money when it
flies,” consumer’s rights association ADUC wrote on
Thursday.
“With the money wasted on Alitalia, the government could have
bought six airlines, namely Air France, KLM, Turkish Airlines,
Norwegian, Finnair and SAS.”

Main category: 

Pressure mounts on Italy to save ailing AlitaliaLufthansa sees
Italy coming under pressure over Alitalia
Source: FS – All-News-Economy
Turbulent future for loss-making Alitalia after rescue stalls