Saturday,
January 17, 2009
Berlusconi Shows How Capitalism Works in
Alitalia Deal
The
ANNOTICO Report
I
had always thought that Capitalism was: Those who Take Risks Earns the Rewards
and Suffers the Losses.
How
Wrong I was.!!!! When you have Friends High in the
Government, A Capitalist can Give themselves Obscene Profits, and then after
running the Enterprise into a Desperate Condition, You can Get the Taxpayer to Bail You Out, the same Taxpayers
that you were exploiting, by Charging onerous fees, participations, salaries,
bonuses, severance payments, golden parachutes, and commissions, and
fraudulently inflating profits.
It
Bush
did it for the US Banking and Investment Interests, and Berlusconi did it for
the Creditors of AlItalia, as you will read below.
Italians Lose, French Win Big in Alitalia
Sale
Reuters
In
the
By
Deepa Babington
Thursday
January 15 2009
Alitalia
took to the skies on Tuesday as a revamped carrier owned by private investors
after a troubled sale process that included a failed takeover last year by Air
France-KLM when the Italian national airline was riddled with debts and losses.
Silvio Berlusconi, then campaigning to become premier, called the
deal humiliating and a French colonisation attempt.
The
French carrier came back less than a year later with an even better deal,
paying less than a fifth of its earlier offer for a 25 percent stake in a
cleaned-up Alitalia stripped of its debt, labour
problems and troubled units.
Italian
taxpayers, meanwhile, will end up paying about 4 billion euros
for Alitalia
That
is 0.3 percent of annual gross domestic product diverted to rescuing Alitalia
or about the same the government spent on shoring up Italy
"Air
France-KLM are the clear winners in all of this,"
Boeri said. "They
Italians
also face the prospect of higher fares on the busy Rome-Milan route where
Alitalia dominates because of its merger with smaller rival Air One as part of
its restructuring.
Indeed,
Air France-KLM has gained a coveted foothold in the Italian market by shelling
out 323 million euros instead of the roughly 1.75
billion euros it previously offered, all without
having to take on militant Alitalia unions and other debts.
The
earlier deal included a 1 billion euro capital hike, 608 million euros for convertible bonds and 10 euro cents per share, or
138 million euros, when the deal was announced. It
would also have assumed other debt of about 1.37 billion euros.
The
market seems to agree on the deal. Air France-KLM shares have bounced off a
52-week low in November to rise 3.7 percent this month, when speculation on the
Alitalia deal intensified.
In
contrast, the shares fell 20 percent between December 2007, when Air France-KLM
was picked as preferred buyer, and April 2008 when that deal fell apart,
sparking a month-long rally.
While
analysts fretted about Alitalia
"The
new Alitalia faces fewer business risks than the former state-owned
carrier," Exane analysts told clients in a note.
"This
could turn out to be a very good investment for Air France-KLM both in itself
and because of the continued and expanded access it brings to the large Italian
market."
Air
France-KLM cannot raise its stake for four years under a lock-up arrangement,
but can do so after that or if the airline decides to relist on the market
after three years.
POLITICAL
OUTCRY
All
this has angered
Massimo
Donadi, leader of the centre-left Italy of Values (IDV)
party in the lower house, waved a copy of French daily Les Echos
sporting a "Merci Silvio" banner headline
in parliament, demanding how the government allowed such a
"scandalous" deal.
"Italy
of Values is not against Air France-KLM, which is an excellent carrier without
doubt and capable of reviving Alitalia," said Antonio Borghesi,
an IDV lawmaker.
"The
problem is that now the French will not pay what they would have under the
previous government, for the simple reason that Italians have already been
lumped with four billion euros."
Alitalia
"We
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