Wednesday, November 29, 2006

Alitalia's "Alliance" with Air France in Doubt

The ANNOTICO Report

 

Consolidation with Domestic Italian Carriers, or a Deal with an Asian or Gulf-based airline are preferred. 

 

Several government ministers and union leaders oppose an accord with the Franco-Dutch airline, which they suspect of wanting to dominate Alitalia.

 

AlItalia has a record of political interference, poor management and turbulent labour relations. Unions plan to stage their next strike on December 15.

 

 

Italy Seeks Domestic Partner for Alitalia


The Financial Times
By Tony Barber in Rome

November 29, 2006

Italy's government is searching for a domestic industrial or financial partner to take a 20-25 per cent stake in Alitalia to preserve the loss-making national carrier's Italian identity, according to trade union sources.

They were speaking as Giancarlo Cimoli, Alitalia's chief executive, said the airline's performance was improving but needed to form part of a bigger international group to become more efficient.

Romano Prodi, Italy's centre-left prime minister, has set a deadline of January 31 for reorganising Alitalia, which made a pre-tax loss of 275.4m ($362m) in the first nine months of this year.

"The strategic outlook for Alitalia can only be that of integration in a big international group that permits the achievement of significant structural synergies," Mr Cimoli told a parliamentary hearing. He blamed Alitalia's losses partly on soaring fuel costs, which he said would rise to almost 1.1bn this year from 580m in 2004 and 480m in 2003.

Alitalia is in exploratory talks with Air France-KLM over expanding their alliance. But several government ministers and union leaders oppose an accord with the Franco-Dutch airline, which they suspect of wanting to dominate Alitalia. Some ministers favour a deal between Alitalia and an Asian or Gulf-based airline, and some want consolidation of Italy's domestic airline industry around Alitalia so that it has a stronger negotiating hand with potential foreign partners.

Union sources said the government hoped to reduce its stake in Alitalia to 25-30 per cent from 49.9 per cent, by selling about half its shareholding to an investor that would try to guarantee the airline's Italian identity.

Meanwhile, a foreign airline would form a partnership with Alitalia, although it was unclear whether it would control the remaining 50.1 per cent.

Alitalia's market capitalisation is about 1.2bn but at the end of October net debt was 972m. Neither a prominent Italian businessman nor a foreign airline has so far expressed eagerness to invest in Alitalia.

With no industrial investors in sight, the government may ask commercial banks to invest in Alitalia on a temporary basis.

Banca Intesa, one of Italy's two biggest banks, denied this month that it was involved in such an arrangement.

The airline has a record of political interference, poor management and turbulent labour relations. Unions plan to stage their next strike on December 15.

http://www.euro2day.gr/articlesfna/24736370/

 

The ANNOTICO Reports

Can be Viewed, and are Archived at:

Italia USA: http://www.ItaliaUSA.com (Formerly Italy at St Louis)

Italia Mia: http://www.ItaliaMia.com

Annotico Email: annotico@earthlink.net