(Adds deputy prime minister’s comment)
PARIS/ROME, Dec 17 (Reuters) - Alitalia's AZPIa.MI board will meet on Tuesday to weigh rival plans by Air One and Air France-KLM in yet another attempt to find a buyer for the state-owned carrier that is losing a million euros a day.
But with Italian Prime Minister Romano Prodi meeting French President Nicolas Sarkozy on Thursday ahead of a meeting of Italy’s cabinet, Tuesday’s board meeting seems unlikely to come to a definitive decision, as had been expected.
The choice between Air France-KLM AIRF.PA and Air One, which have both pledged cash and new aircraft to turn Alitalia around, ultimately rests with Italy's coalition government and Prodi admitted last week that his cabinet was divided.
“The choice has not been made yet,” Deputy Prime Minister Francesco Rutelli said in a television interview late on Monday.
“Alitalia must propose the best partner, but the government also has a responsibility ... It is not about necessarily choosing an Italian airline, it is not a nationalistic issue. But the interest of the country is at stake. Where will our children, our firms leave from to go to China or India? Will they have to fly from Paris, or even Frankfurt, or will they be able to leave from Milan or Rome?” he said. “It’s a very important choice, it’s an open fray.”
Rutelli had said over the weekend that neither offer was convincing, while Transport Minister Alessandro Bianchi said on Monday that both needed to be studied.
Financial details are secondary to a decision that must take into account combative unions and regional interests that want to keep Milan’s Malpensa as a hub.
Domestic carrier Air One, which has bid 1 euro cent per share, said it would offer shareholders who accepted its offer a 3 percent stake in the new group and was ready to give stakes to one or more international players.
AP Holding, which controls Air One, said in a statement it would immediately pump at least 1 billion euros ($1.43 billion) into the airline through a capital increase and would buy all Alitalia bonds held by the Treasury.
The price of 0.01 euro per share “will allow the resources invested to be entirely used to relaunch the company,” it said.
Air France-KLM’s plans include a cash injection of at least 750 million euros.
Alitalia’s shares, battered on Friday on news that the highest offer was only 0.35 euros per share, recovered after steep early losses on Monday and closed down 1.62 percent at 0.7085.
That gives the airline, which carries some 1.2 billion euros of debt, a market value of around 980 million euros -- down from about 1.35 billion euros when the government first put its 49.9 percent stake up for sale a year ago.
Alitalia’s main attraction is its dominance of the business route from the financial capital of Milan to Rome, where Air One is its only major competitor. Its attractiveness for Air France-KLM may have increased as rival Lufthansa gets closer to buying Spain’s Iberia.
Air France-KLM, a long-time commercial partner of Alitalia, emerged as a bidder earlier this month after snubbing year-long attempts by the Italian government to find a buyer.
OFFERS ON THE TABLE
The Franco-Dutch airline said in a statement on Monday it had made a non-binding share exchange offer and it would buy all of Alitalia’s convertible bonds.
It gave no details on the share-exchange ratio, the assumed value of Alitalia or timing of the planned offer.
Air France-KLM shares fell broadly in line with its European peers, losing around 3.57 percent to 23.22 euros, which gives it a market capitalisation of about 6.97 billion euros.
Air France-KLM would immediately inject at least 750 million euros into Alitalia through a capital increase open to all shareholders and fully underwritten by Air France-KLM.
That could allow Rome, which is banned by the European Commission from giving any more funds to the money-losing airline, to take a minority stake in the new group.
Air France-KLM added that there would be no further redundancies over those already planned by Alitalia, which could mean up to 1,700 job losses.
Air France-KLM would renew all Alitalia’s Boeing Co MD80 short/medium-haul fleet and the B767 long-haul fleet. Air One plans to buy 130 Airbus aircraft to renew Alitalia’s fleet.
Its head, Carlo Toto, whose bid is backed by Italy’s largest retail bank, Intesa Sanpaolo, said he would be willing to cede around 20 percent of the future company’s slots for the Rome-to-Milan route to meet antitrust regulations.
Air One, whose total annual revenues hardly match Alitalia’s losses, needs to show it can finance its bid. Although it has a commercial deal with Lufthansa, it has not yet flaunted the clout of such an international partner in its actual bid.
But Intesa Sanpaolo Chief Executive Corrado Passera said it would be wrong for Air One to make alliances “cap in hand” like beggars to secure a deal. He added the firm would remain listed.
Alitalia said on Monday a mysterious consortium led by investment fund Evergreen had withdrawn their interest. ($1=.6975 Euro) (Additional reporting by Deepa Babington, Phil Stewart, Gavin Jones and Silvia Aloisi; Editing by Paul Bolding/Elizabeth Fullerton/David Cowell/Richard Chang/Andre Grenon)
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