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Italy's post office says to invest 70 mln euros in Alitalia
July 31, 2014 / 6:42 PM / 3 years ago

Italy's post office says to invest 70 mln euros in Alitalia

ROME, July 31 (Reuters) - Italy’s post office operator said on Thursday it would inject 70 million euros ($94 million) into Alitalia, as the debt-laden airline scrambles to secure a life-saving tie-up with Abu Dhabi carrier Etihad Airways.

State-owned Poste Italiane, which already paid 75 million euros for a 20 percent stake in Alitalia last year as part of a government-engineered rescue, will invest the money via a separate dedicated vehicle.

Etihad has imposed a series of strict conditions on Alitalia as part of a deal to buy 49 percent of the Italian airline, which has made a profit only a few times in its 68-year history.

Talks between the airlines have dragged on for more than seven months amid wrangles over how to deal with Alitalia’s 800 million euro debt pile and demands to cut some of its 14,000 staff.

Rome hopes the tie-up will turn around a company which has struggled to compete against low-cost airlines and high-speed trains and became a symbol of economic weakness in a country struggling to emerge from recession.

The post office insisted on investing in Alitalia through a separate vehicle, rather than directly, to avoid taking on the airline’s debt and other liabilities, sources said this week.

Alitalia’s shareholders approved a 250 million euro capital hike last week to help guard against any losses it might make before a deal is finalised and pay for past liabilities.

The upper limit on the size of the capital hike may be raised to 300 million euros, separate sources said on Wednesday.

Alitalia’s board, which includes representatives from the countries top two banks Intesa Sanpaolo and Unicredit , is due to meet on the matter on Friday. ($1 = 0.7469 Euros) (Reporting by Isla Binnie; Editing by Robin Pomeroy)

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