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

Ukraine President Appeals for More US Support

Speaking before Congress ahead of meeting with President Obama, Petro Poroshenko urges lawmakers to back Ukraine in its quest for freedom and democracy More

Photogallery Global Audience Watches as Scots Go to the Polls

People were almost equally divided over a vote for independence, watched closely by Britain's allies, investors and restive regions at home and abroad More

China to Invest $20B in India Amid Border Dispute

Border spat between armies of two countries in Himalayas underlines mutual tensions despite growing commercial ties highlighted by Xi Jinping's high-profile visit More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
A Dinosaur Fit for Land and Wateri
X
September 17, 2014 8:44 PM
Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.
Video

Video NASA Picks Boeing, SpaceX to Carry Astronauts Into Space

The U.S. space agency, NASA, has chosen Boeing and SpaceX companies to build the next generation of spacecraft that will carry U.S. astronauts to the International Space Station by the year 2017. The deal with private industry enables NASA to end its dependence on Russia to send space crews into low Earth orbit and back. Zlatica Hoke has more.
Video

Video Future of Ukrainian Former President's Estate Uncertain

More than six months after Ukraine's former President Viktor Yanukovych fled revolution to Russia, authorities have yet to gain control of his palatial estate. Protesters occupy the grounds and opened it to tourists but they are also refusing to turn it over to the state. VOA's Daniel Schearf reports from Mezhigirya, just north of Kyiv.
Video

Video China Muslims Work to Change Perceptions After Knife Attacks

China says its has sentenced three men to death and one woman to life in prison for a deadly knife attack in March that left more than 30 dead and 140 injured. Beijing says Muslim militants from China's restive western region of Xinjiang carried out the attacks. Now, more than six months after the incident, residents in the city are still coping with the aftermath. VOA's Bill Ide has more from Kunming.
Video

Video Enviropreneur Seeks to Save the Environment, Empower the Community

Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid