UPDATE 1-Alitalia to propose capital hike of up to 250 mln euros-source

Thu Jul 24, 2014 3:34pm EDT

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(Adds Alitalia meeting with Poste Italiane, background)

ROME, July 24 (Reuters) - The board of Italy's flagship airline Alitalia will propose to shareholders a capital increase of as much as 250 million euros ($336.68 million), a source with knowledge of a document said on Thursday after a meeting of the airline's board.

"The board prepared a document for the shareholders meeting in which they are asked to approve a capital increase of 200 to 250 million euros," the source said.

Alitalia shareholders are to meet on Friday. Abu Dhabi's state-owned Etihad Airways has plans to buy a 49 percent stake in the loss-making airline if it can meet certain conditions.

The share issue, which sources said on Monday would be worth 200 million euros, is intended to cover any losses Alitalia is likely to make before a deal with Etihad is finalised, and to pay for any past liabilities.

Talks to resolve one of the sticking points in the deal began after the board meeting with the arrival of Luigi Calabria, the chief financial officer of Poste Italiane, Italy's state-owned postal service and the airline's second-biggest shareholder.

On Monday, sources told Reuters Poste Italiane would only invest more money in Alitalia if it were able to avoid taking on the airline's past liabilities, a position that risks derailing the deal that has been in the works for months.

Poste Italiane holds 20 percent of Alitalia, and it invested 75 million euros in the carrier late last year as part of a 500 million euro, government-engineered rescue package to keep Alitalia flying while it sought a foreign investor.

($1 = 0.7426 Euros) (Reporting by Alberto Sisto, writing by Steve Scherer; Editing by Phil Berlowitz)

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