ROME — 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.