January 13, 2014 / 5:51 PM / 4 years ago

UPDATE 1-Alitalia to ask banks for more funding

* Could need another cash call if targets not reached - CEO

* Talks for Etihad tie up in early stages

* Air France-KLM still interested in industrial cooperation (Adds CEO’s comments, further details)

ROME, Jan 13 (Reuters) - Troubled Italian airline Alitalia will ask banks for additional funding and could be forced to launch another share issue if the business does not perform as planned, its chief executive said on Monday.

The loss-making airline is struggling to keep flying and raised 300 million euros ($410 million) in an emergency capital increase last month having agreed 200 million euros in bank financing in October.

“If the business plan targets are not reached another cash call will be inevitable,” Gabriele Del Torchio told a shareholders meeting which re-elected him as chief executive and Roberto Colaninno as chairman.

Earlier in January newspaper Il Messaggero said Alitalia had asked banks to extend existing loan agreements by 50 million euros.

Italy’s biggest retail bank Intesa Sanpaolo is Alitalia’s leading shareholder with a 20.6 percent stake while UniCredit is its third-largest investor with 13 percent.

Air France-KLM was Alitalia’s biggest shareholder with 25 percent but its stake fell to around 7 percent after the Franco-Dutch group snubbed Alitalia’s recent rights share offer.

Alitalia needs money to invest in more lucrative long-haul routes after a focus on domestic and regional flights failed to pay dividends due to competition from budget carriers and high-speed trains.

Talks are under way with Etihad to bring the fast-expanding Abu Dhabi-based airline on board, with sources close to the matter having said Etihad is willing to take a stake of up to 40 percent.

However, Etihad said earlier on Monday it would not be rushed into making a decision over an investment.

Del Torchio said the talks with Etihad were in an exploratory phase, but added he was “optimistic”.

Alitalia’s CEO, who said the new board would remain in place until 2014 results were approved, also told shareholders Air France-KLM was still interested in an cooperation deal. ($1=0.7324 euros) (Reporting by Alberto Sisto; Writing by Stephen Jewkes; Editing by Greg Mahlich)

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