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

Photogallery Americans Celebrate Thanksgiving With Feasts, Festivities

Holiday traditions include turkey dinners, 'turkey trots,' American-style football and New York parade with giant balloons More

Video For Obama, Ferguson Violence is a Personal Issue

With two years left in term, analysts say, president has less to lose by taking conversation on race further More

Video Italian Espresso Expands Into Space

When Italian astronaut Samantha Cristoforetti headed for the ISS, her countrymen worried how she would survive six months drinking only instant coffee More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
To Make A Living, Nairobi Street Vendors Face Legal Hurdles, Physical Violencei
X
Lenny Ruvaga
November 27, 2014 7:05 PM
The Nairobi City Council has been accused of brutality in dealing with hawkers in the Central Business District - in order to stop them from illegally selling their wares on the streets. Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video To Make A Living, Nairobi Street Vendors Face Legal Hurdles, Physical Violence

The Nairobi City Council has been accused of brutality in dealing with hawkers in the Central Business District - in order to stop them from illegally selling their wares on the streets. Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video For Obama, Ferguson Violence is a Personal Issue

Throughout the crisis in Ferguson, Missouri, President Barack Obama has urged calm, restraint and respect for the rule of law. But the events in Ferguson have prompted him to call — more openly than he has before — for profound changes to end the racism and distrust that he believes still exists between whites and blacks in the United States. VOA White House correspondent Luis Ramirez reports.
Video

Video Online Magazine Gets Kids Discussing Big Questions

Teen culture in America is often criticized for being superficial. But an online magazine has been encouraging some teenagers to explore deeper issues, and rewarding their efforts. VOA religion reporter Jerome Socolovsky went to this year’s Kidspirit awards ceremony in New York.
Video

Video US Community Kicks Off Thanksgiving With Parade

Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid