News / Europe

Italy considering Alitalia rescue as creditors circle

Alitalia planes ready to take off at Linate airport in Milan, Italy, Oct. 10 ,2013.
Alitalia planes ready to take off at Linate airport in Milan, Italy, Oct. 10 ,2013.
Reuters
The Italian government is considering joining a 500-million euro ($676 million) rescue plan for Alitalia after unions warned the national airline risked defaulting within days and creditor Eni  threatened to stop supplying fuel.
 
Sources close to the situation said on Thursday that under the plan the government could inject 150 million euros into the airline, the same amount as existing shareholders, while banks would provide an additional 200 million euros in new loans.
 
The government made its support conditional on major change at the troubled carrier, which has not turned in a profit since 2002 and is struggling to keep up payments on one billion euros of debt, the sources told Reuters.
 
“It's a bridging solution to guarantee the financial survival of the company but it depends on a strong change in the way the company is run,” one of the sources said, speaking on condition of anonymity.
 
The source said the government was still pinning its longer-term hopes on a strategic partnership between Alitalia and Air France-KLM, which is the Italian carrier's top shareholder with a 25 percent stake.
 
Under the proposed rescue plan, the government would subscribe to Alitalia's capital increase with 75 million euros through the national post office, Poste Italiane.
 
The rest of the state help would come in the form of credit guarantees, the sources said, adding the aim was to present a deal to Alitalia's board at a meeting on Friday.
 
The board meeting had been scheduled for Thursday but was postponed, giving Prime Minister Enrico Letta's government, itself cash-strapped, longer to come up with an interim solution.
 
Alitalia and Poste Italiane were not available for comment.
 
Ministers have approached several state companies in the past few weeks, including railway operator Ferrovie dello Stato, trying to persuade them to stump up funding to keep Alitalia flying. After a meeting with executives, trade unions said on Wednesday the airline risked default “within days”.
 
Letta is loath to see another national asset fail or be sold to a foreign rival without guarantees on jobs. Spain's Telefonica recently did a deal to take over the controlling company behind Telecom Italia.
 
The big question is whether Alitalia's largest shareholder, Air France-KLM, will raise its 25 percent stake.
 
That airline, in the middle of a restructuring itself, was barred from a full takeover in late 2008 by then prime minister Silvio Berlusconi, who instead strung together a disparate group of 21 investors including retail bank Intesa Sanpaolo  and road operator Atlantia.
 
Since then, Alitalia has lost nearly 700,000 euros a day and become a symbol of Italy's economic malaise, hampered by mismanagement and political meddling.
 
Now the government and Alitalia's shareholders are ready to let Air France up its stake and possibly even take over the group, but there is no agreement with the Franco-Dutch carrier over financial commitments and business strategy.
 
Alitalia, which according to analysts needs at least 10 million euros a day to keep its aircraft flying, said on Sept. 26 that it had total available cash of 128 million euros, including unused credit facilities.
 
A source close to the matter told Reuters on Wednesday that Eni would stop supplying fuel to Alitalia beyond Saturday if the airline cannot ensure business continuity.

You May Like

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Video Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid