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The Italian government is racing to save Alitalia from bankruptcy after unions warned the national airline risked defaulting within days and creditor ENI threatened to stop supplying fuel.
Alitalia, struggling to keep up payments on one billion euros of debt, postponed until Friday afternoon a board meeting scheduled for 1500 GMT on Thursday. An Alitalia spokeswoman declined to say why, but the delay gives Prime Minister Enrico Letta’s government, itself cash-strapped, longer to try to persuade another Italian company to stump up interim funding.
Alitalia, which has not turned a profit since 2002, needs a 300 million euro ($405.5 million) capital increase and a 200 million euro credit line from banks to stay in business, trade unions said on Wednesday after a meeting with the company.
Letta is loathe to see another national asset fail or 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 – and is seeking another state-controlled firm willing to split a capital increase with shareholders.
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.
Finding alternative lending til they agree has been tough.
The head of Italy’s national railway company Ferrovie dello Stato said on Wednesday it could only give a “modest contribution” to any rescue of Alitalia.
Italy’s post office Poste Italiane declined to comment on a newspaper report on Thursday that its chief had been summoned to Letta’s office to discuss taking part in a cash injection.
The government also sought help from state holding Cassa Depositi e Prestiti, which has already taken over a number of government-owned companies, but a source close to the situation told Reuters this week this option had now been ruled out.
“There is a risk of default within days,” Franco Nasso, secretary general of the Filt-Cgil union, told reporters on Wednesday after talks with the airline’s management. Alitalia said on Sept. 26 that it had total available cash of 128 million euros, including unused credit facilities.
Such a sum would not last long. Andrea Giuricin, a transport analyst at Milan’s Bicocca University, estimates Alitalia needs at least 10 million euros a day to keep its aircraft flying and has annual operating costs of at least 3.7 billion euros.
A source close to the matter told Reuters on Wednesday Eni would stop supplying fuel to Alitalia beyond Saturday if the airline cannot ensure business continuity.
The head of Italy’s civil aviation authority ENAC said on Thursday the situation was difficult but there was no sign the airline was about to halt operations.
“We have to see whether they can honour their commitments,” ENAC President Vito Riggio said after meeting Alitalia’s executives.
Copyright (2013) Thomson Reuters. Click for restrictions.