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

Kurdish Party Pushes Political Gamble to Run in Turkey Poll

HDP announces it will run as political party instead of fielding independent candidates in June election, but faces tough 10 percent threshold More

Twitter Targets Islamic State

New research shows suspending Twitter accounts of Islamic State, its supporters has been effective; group, its backers are facing 'significant pressure,' says terrorism expert More

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

Majur Juac made the leap from being a refugee in Africa to a master chess champion in US, where he shares his expertise with students More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA Monitors Earth’s Vital Signs From Spacei
X
Rosanne Skirble
January 27, 2015 5:05 PM
The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.
Video

Video Saved By a Mistake - an Auschwitz Survivor's Story

Dagmar Lieblova was 14 when she arrived at Auschwitz in December 1943, along with her entire Czech Jewish family. All of them were to die there, but she was able to leave after several months due to a bureaucratic mix-up which saved her life. Now 85, with three children and six grandchildren, she says she has a feeling of victory. This report by Ahmad Wadiei and Farin Assemi, of RFE/RL's Radio Farda is narrated by RFE’s Raymond Furlong.
Video

Video Weekly Protests in Korea Keep Japanese WWII Atrocities Alive

Every week in Seoul protesters gather in front of the Japanese Embassy to demand an apology and reparations from Tokyo for the thousands of South Korean women who were forced into prostitution during World War II. Although this year marks the 70th anniversary of the end of the war, these protestors have helped keep the issue of comfort women alive and made it difficult for Japan to move beyond its past wartime atrocities. VOA's Brian Padden reports from Seoul.
Video

Video Exercise: New Prescription for Parkinsons Disease

Exercise could be the new prescription for Parkinson's Disease, a progressive disorder of the nervous system that affects movement. More than six million people worldwide suffer from Parkinsons and they're traditionally treated with medication and surgery. Shelley Schlender has more.
Video

Video Brussels Shaken as New Greek Leader Challenges Europe’s Austerity Drive

Greece’s youngest-ever prime minister, 40-year-old Alexis Tsipras, was sworn in Monday after his victorious far-left Syriza party entered a coalition with far right rivals. Tsipras says he will restore dignity to Greece by ending spending cuts. So begins a new chapter for the country at the epicenter of Europe’s economic crisis - a change that has sent tremors across the continent, as Henry Ridgwell reports from London.
Video

Video Obama Urges Closer Economic Ties During Historic India Visit

U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video White House Grapples With Yemen Counterterrorism Strategy

Reports say the U.S. has carried out a drone strike on suspected militants in Yemen, the first after President Barack Obama offered reassurances the U.S. is continuing its counterterrorism operations in the country. The future of those operations has been in question following the collapse last week of Yemen’s government. VOA White House correspondent Luis Ramirez reports.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Oil Price Drop Troubles Texas Producers

As oil prices have fallen over the past several months, drilling operations have slowed in some parts of the United States - including Texas, the state that surpasses all others in energy production. The Lone Star State’s energy output has been boosted in recent years by development of resources trapped deep below ground in the Eagle Ford shale deposit, which stretches across south central Texas. As VOA’s Greg Flakus reports from Karnes City, Texas, the drop in oil prices has created concerns,
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid