Mama Mia! Alilalia!

Colonel Savage

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Alitalia Seeks Bankruptcy Shield, Paving Way for Sale (Update1)

By Andrew Davis
Aug. 29 (Bloomberg) -- Alitalia SpA said it was insolvent and asked for protection from creditors, a move that will kick start a government-backed plan to sell the state-controlled carrier.
Under the so-called Phoenix plan, Alitalia's unprofitable units will be sold or liquidated and the airline business merged with Air One SpA, its biggest domestic rival, creating a debt- free carrier with 65 percent of the Italian market. A group of investors, led by Piaggio SpA Chairman Roberto Colaninno, will put up about 1 billion euros ($1.46 billion) to buy and finance the new carrier.
The government yesterday modified the country's main bankruptcy law to prepare for the Alitalia insolvency request. Industry Minister Claudio Scajola or Prime Minister Silvio Berlusconi will now appoint a special commissioner to implement the reorganization of the carrier and the sale of assets.
``This is a needed first step toward returning the company to profit,'' said Edoardo Liuni, an analyst at IlNuovoMercato in Rome. ``The next, fundamental move will be to choose the right international partner.''
Air France-KLM Group, Alitalia's partner in the SkyTeam alliance, said yesterday it may buy a stake in the new company. Air France dropped an offer to purchase the entire airline in April after opposition from unions and Silvio Berlusconi during his successful campaign to become prime minister. Berlusconi called the Air France bid supported by the former government ``arrogant'' and pledged to put together a group of investors to keep the carrier in Italian hands.
After coming to power, Berlusconi kept the airline in business with a 300 million-euro government loan and brought in Intesa Sanpaolo SpA, the country's second-biggest bank, to come up with a strategy to save a carrier that has lost more than 3 billion euros in the past seven years.
Job Cuts
The Intesa plan calls for as many as 7,000 job cuts. The government aims to make unemployment and other benefits available for seven years to workers whose jobs are eliminated. Some of the workers will be relocated to other state-run businesses. Leaders of Alitalia's nine unions are already balking at the cuts. Labor Minister Maurizio Sacconi will hold a meeting with them on Sept. 1 to discuss Alitalia.
Intesa Chief Executive Officer Corrado Passera said today that the next four or five weeks will be critical for the success of the plan.
Intesa will invest between 100 million euros and 150 million euros to take a stake of about 10 percent in the new airline. Among the 16 investors committed to the buyout, Colaninno's Immsi holding company will put up as much as 150 million euros and Atlantia SpA, the toll-road company controlled by the Benetton family, will invest up to that amount as well.
Antitrust Hurdle
The plan may meet resistance from European Union regulators. The European Commission is already challenging the state's 300 million-euro loan to Alitalia, saying it may constitute illegal aid under antitrust rules. Funds to cushion the effects of the job cuts may also be construed as aid. The government has sent the plan to the EU, where it's being reviewed, EU Transport Commissioner Antonio Tajani said Aug. 27.
The Italian government has been trying to sell Alitalia for more than two years. Former Prime Minister Romani Prodi first held an auction process, which failed when all the potential bidders dropped out after rejecting the state-imposed conditions for purchase. Air France was then chosen over Air One to buy Alitalia, before dropping its offer in April.
Paris-based Air France owns 2 percent of Alitalia. The Italian carrier was supposed to participate in the 2003 merger between Air France and KLM Royal Dutch Airlines NV that formed Europe's biggest airline by revenue. Alitalia was excluded from the tie-up because of its deteriorating financial situation. The carrier hasn't posted an operating profit in nine years.
 

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Italy Scrambles To Save Bankrupt Alitalia

Italy scrambles to save bankrupt airline Alitalia

Sunday, September 14, 2008

(09-14) 04:11 PDT ROME, Italy (AP) --

The Italian government is holding emergency talks with unions and investors over a plan to save Alitalia as the bankrupt airline risks having to ground flights for lack of fuel.

The rescue plan would have investors buying profitable assets and investing $1.4 billion amid wage cuts and layoffs that are opposed by the unions.

The government is mediating emergency talks that started Saturday and resumed Sunday morning.

Talks broke down on Friday when the investors walked out after failing to win the unions' crucial support. The investors' offer remains on the table, and officials are trying to break the deadlock.
 

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Alitalia Could Be grounded In Days

Alitalia could be grounded in days

By FRANCES D'EMILIO

Monday, September 22, 2008

(09-22) 07:38 PDT ROME, Italy (AP) --

Italian aviation authorities on Monday warned that Alitalia could be grounded within days if no deal is reached to sell the bankrupt airline.

Alitalia's bankruptcy administrator said the airline's chances for survival looked bleak.

"There are no prospects for a rescue in a reasonable time," Augusto Fantozzi told reporters.

Without a rescue plan, the national civil aviation body, ENAC, may be forced to ground the airline, the agency's chief, Vito Riggio, said after meeting with Fantozzi.

"By Thursday, Alitalia's bankruptcy commissioner must come up with a credible plan to avoid the revocation or suspension of the flight license," Riggio said. ENAC officials would then take two or three days to study the plan, he said.

ENAC said in a statement later that any rescue plan must be "realistic," and that the agency is monitoring Alitalia's safety situation daily.

The agency said Fantozzi himself might seek the suspension of flights if no concrete deal materializes.

"For the time being, flights are regular, the financial situation is difficult, but we will wait until next week before taking any decision," Fantozzi told Associated Press Television News.

ENAC wants to verify the airline can fulfill European Union requirements, such as having enough money to ensure refueling, maintenance and safety.

Fantozzi told reporters that this month's payroll, due Sept. 27, will use up much of what little cash Alitalia has left.

Italy's transport minister had already warned that Alitalia might not be flying by next week if unions didn't agree to an offer by Italian investors to buy the airline's potentially profitable assets. The investors withdrew their offer last week.

Some unions have accepted the rescue plan, which calls for some 3,250 layoffs among the airline's 19,000 workers, the elimination or reduction of loss-making routes and the sale of many aircraft. But some, including pilots' representatives, rebuffed the deal last week because of objections to the layoffs and reduction in routes, and the investors withdrew the offer.

Fantozzi asked in a notice on Alitalia's Web site Monday if anyone else "able to guarantee" Alitalia's operations might be interested in acquiring any or all the airline's divisions.

Alitalia was close to being acquired by Air France-KLM this year. But Premier Silvio Berlusconi, while campaigning for office, promised he would keep Alitalia "Italian," and boasted he would line up Italian investors to acquire the company. Unions then rejected Air France-KLM's terms.

The rebuffed Italian plan would split Alitalia in two, with the potential profit-making part joined to Alitalia's largest domestic competitor, Air One.

The investors' group, known as CAI, is led by Piaggio chairman Roberto Colaninno. It promised to inject 1 billion euros ($1.4 billion) into the new company. Unprofitable assets would be liquidated.
 

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Alitalia Has Hung Out A "For Sale" Sign

Alitalia hangs out 'For Sale' sign

By COLLEEN BARRY, AP Business Writer

Tuesday, September 23, 2008


(09-23) 13:11 PDT MILAN, Italy (AP) --

Alitalia has hung out a "For Sale" sign — again.

The bankrupt airline published a notice in four newspapers on Tuesday soliciting offers to buy any or all of the company's assets.

The move came after a group of Italian investors withdrew its offer to take over the profitable assets of Alitalia.

It was the third failed attempt to sell off the long-troubled airline in less than two years as Italy struggles to keep a four-year-old pledge to the EU to privatize the flagship carrier.

Alitalia is seeking "whoever might be able to guarantee the continuity, in the medium term, of the transportation service ... to submit its expression of interest," read the notice published in the Italian newspapers Corriere della Sera, il Sole-24 Ore and la Repubblica, as well as the London-based Financial Times.

The notice, initially posted Monday morning on the airline's Web site, urges potential buyers to take into account the need for a speedy transaction.

Alitalia quoted bankruptcy administrator Augusto Fantozzi Tuesday night as saying that in response to the public notice there has been some display of interest by both potential Italian and foreign buyers for "parts or branches of the company." Fantozzi did not elaborate.

With Alitalia's future still unclear, Premier Silvio Berlusconi will not go to New York for the U.N. General Assembly, where he had been scheduled to speak on Saturday, Foreign Minister Franco Frattini told reporters in New York. Frattini said he would deliver the speech in place of Berlusconi, the Italian news agency Apcom reported.

Meanwhile, the first report of a creditor moving to seize assets from Alitalia was confirmed. The Israel Airports Authority has an application pending with a court in Tel Aviv to recover $500,000 owed by Alitalia, a spokesman said Tuesday.

Barring a valid offer, Fantozzi — appointed after the airline declared bankruptcy Aug. 29 — said Alitalia's clock would stop ticking Oct. 1. Italian civil aviation authorities have indicated the end might come even sooner.

The government has already made clear that the offer by the group of Italian investors led by scooter-maker Piaggio chairman Roberto Colaninno was the last best chance for Alitalia's survival. The group had pledged to inject 1 billion euros ($1.4 billion) into the bankrupt airline, sell off unprofitable assets and merge the rest with Italy's No. 2 carrier Air One. But the deal — like the offer by Air France-KLM last spring — was withdrawn amid union objections.

Italian aviation authorities have warned that Alitalia could be grounded within days if no deal is reached to sell the bankrupt airline.

Italy's civil aviation agency ENAC has said it is monitoring Alitalia's safety situation daily. ENAC wants to verify the airline can fulfill European Union requirements, such as having enough money to ensure refueling, maintenance and safety.

Fantozzi has said that this month's payroll, due Sept. 27, will use up much of what little cash Alitalia has left.
 

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Major Unions Sign Off On Alitalia Deal

Major unions sign off on Alitalia deal

By COLLEEN BARRY and FRANCES D'EMILIO

Thursday, September 25, 2008

(09-25) 07:20 PDT ROME, Italy (AP) --

Alitalia's four major union confederations signed off on a resurrected rescue plan Thursday to keep the bankrupt Alitalia airline aloft, signaling a possible breakthrough just as civil aviation authorities were considering whether to ground Italy's flagship carrier.

While the deal still lacks crucial backing from pilots and flight attendants, there was a mood of cautious optimism.

Alitalia's administrator, Augusto Fantozzi, said a new Alitalia could be relaunched by mid-October, but he appealed to travelers to book flights on the national carrier to secure its future.

"Alitalia flies, and it continues to fly, but there has been a reduction in the sale of tickets due to the public's understandable uncertainty and doubts. ... We need to say, 'Buy Alitalia tickets,'" Fantozzi told a press conference.

He said ticket sales were down by 100,000 during September, as tough negotiations with unions put Alitalia's future in doubt.

The powerful CGIL union, which was among the union holdouts whose refusal to sign an industrial plan last week led to a breakdown in talks, finally signed on during a meeting with Italian investors and government officials at Chigi Palace. The other three confederations were already behind it.

CGIL leader Guglielmo Epifani urged the pilots and flight attendant unions, who were meeting later Thursday with their rank-and-file at Rome's' Leonardo da Vinci airport, to sign off on the plan "and contribute to the relaunch of the company."

The development came at a critical juncture, with civil aviation authorities threatening to ground Alitalia within days if there isn't a valid plan to keep the airline running.

Officials say that now Alitalia management is in a position to seek reinstatement of Alitalia's licenses on a permanent basis. It currently is flying on a six-month provisional license issued Sept. 2.

The government has made clear that the plan drafted by the bank Intesa SanPaolo and backed by a group of 16 Italian investors was the airline's last, best chance for survival, after two failed attempts at privatizing the long troubled airline in the last two years. The investors have pledged to inject 1 million euros ($1.4 million) into the loss-making carrier, strip away unprofitable assets and merge it with Italy's second-largest carrier, the much smaller Air One.

They also are looking for an international carrier, possibly Air France-KLM, to take a minority share and give expertise to the new company.

The civil aviation authority ENAC has given Fantozzi a Thursday deadline to present a valid operational and financial plan, or risk pulling Alitalia's license.
 
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