News & Current Affairs

September 13, 2008

Alitalia ‘running out of fuel’

Alitalia ‘running out of fuel’

Alitalia plane

Negotiations with unions will be critical to saving the airline

Italy’s troubled national airline, Alitalia, cannot guarantee flights beyond Sunday because of a lack of funds to buy fuel, a top official says.

“Until the end of tomorrow, flights are guaranteed. From Monday, they are not,” Augusto Fantozzi, Alitalia’s bankruptcy administrator, told unions.

Mr Fantozzi was speaking as he called the unions to emergency talks a day after the latest session broke down.

Prime Minister Silvio Berlusconi blamed “political” motives for the failure.

He said he would do all he could to save Alitalia from collapse.

“The executive is always ready… to give all the possible support to get to the only solution possible to avoid the airline going bust,” he told the Italian news agency Ansa.

Italian investment consortium CAI, which was poised to take over the company’s profit-making parts, walked away from talks with the unions on Friday, accusing them of intransigence.

CIA chief executive Rocco Sabelli said on Saturday it was not ready to make any further concessions.

August 30, 2008

Alitalia seeks bankruptcy measure

Alitalia seeks bankruptcy measure

Alitalia plane

Negotiations with unions will be critical to saving the airline

Troubled Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival.

The carrier has sought court protection from its creditors, effectively declaring itself insolvent.

An administrator will be appointed to handle the process, with flights continuing while the firm plans a radical overhaul of its operations.

Losing 2m euros (£1.6m) a day, Alitalia has survived on a 300m-euro state loan.

Plans are being drawn up to split the carrier into two and to sell a stake in a new entity to a foreign airline.

Split in two

Guaranteeing the airline’s future will depend on securing fresh investment and persuading its unions to accept large job cuts.

Both Air France KLM and Lufthansa have expressed interest in investing in any new entity which emerges from the current business.

No one can buy Alitalia in the state it’s in… the business is toast
Roberto Colaninno

Earlier on Friday, Corrado Passera, head of the airline’s financial advisers Intesa Sanpaolo, confirmed that Alitalia’s board was drawing up a request to seek bankruptcy protection.

The move will give the firm breathing space to reach agreement on how the business can proceed.

The government adopted new measures on Thursday aimed at speeding up bankruptcy proceedings, widely interpreted as a signal that Alitalia was set for such a course of action.

Future plans for the carrier would see it divided in half, with its loss-making operations remaining under bankruptcy protection and potentially being liquidated.

Profitable short-haul routes would be separated into a new business, controlled by a consortium of Italian investors including budget airline Air One which would effectively be merged with Alitalia.

Italian media have speculated that the new firm will employ 7,000 fewer staff than Alitalia’s current 19,000 strong workforce and operate flights to about 50 fewer destinations.

Italian ownership

Prime Minister Silvio Berlusconi has made Alitalia’s continued ownership by Italian interests a precondition of any rescue deal.

However, experts have said the airline – of which the government owns 49% – can only survive in the future as part of some European alliance.

Italian Prime Minister Silvio Berlusconi

Silvio Berlusconi wants to keep the airline in Italian hands

Previous attempts to sell the business to a foreign airline have foundered over union concerns about job losses and unease over the severity of the airline’s financial problems.

The airline’s perilous position was put into perspective by Roberto Colaninno, appointed to take charge of the new entity that emerges from the restructuring.

“No one can buy Alitalia in the state it’s in,” he told La Repubblica newspaper.

“With all respect, I am not Merlin the magician. The business is toast. It doesn’t exist any more. There’s nothing left.”

Alitalia has been crippled in recent years by strategic indecision, poor industrial relations and soaring fuel costs.

Its shares were suspended earlier this summer while the firm has delayed the release of its 2007 accounts.

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