ROME (Reuters) - Italian airline Alitalia will lose $1.25 billion in 2008 but a pending takeover by a group of Italian businessmen could revive its fortunes, the administrator overseeing its bankruptcy said as he signed off on the deal.
As final plans to sell Alitalia to the CAI group are wrapped up, administrator Augusto Fantozzi urged more Italians to fly the airline that is canceling more than 100 flights a day due to protests by employees against the deal.
“I often receive expressions of affection for Alitalia by Italians abroad,” he told a news conference after approving the takeover. “I wish more Italians here would do the same.”
CAI will pay 427 million euros ($534.8 million) in cash and take on debt worth 625 million euros to buy Alitalia’s best assets, while the airline’s remaining debt and unprofitable units will be taken on by the Italian state, Fantozzi said.
“It’s a sale. Believe me, it’s not a donation,” Fantozzi said, brushing off criticism that the government-backed deal was designed to privatise the carrier’s expected future profits while leaving its debts on the shoulders of Italian taxpayers.
The Italian government and the European Commission have already approved the sale, leaving labour protests the only hurdle remaining before CAI. But union anger has shown little sign of halting the deal, and CAI has already began approaching Alitalia workers individually to hire them.
The deal with CAI will close on Nov. 30, Fantozzi said, adding that any issues related to Alitalia will be the investor group’s responsibility after that date, even if the official relaunch of the airline is delayed.
CAI, a group of 16 top Italian business names formed after Prime Minister Silvio Berlusconi urged Italian entrepreneurs to save the money-losing carrier, plans to reinvent Alitalia as a smaller, more efficient airline.
That comes after a painful two-year hunt for a buyer that included a failed auction and the collapse of a planned deal to be bought by Air France-KLM, leaving the airline on the brink of liquidation more than once.
It filed for bankruptcy in August, crippled by high labour costs, strikes, surging oil prices and political meddling.
Alitalia is expected to post an operating loss of 1 billion euros in 2008, on revenue of 3.7 billion euros, Fantozzi said.
Fantozzi said either partner would be suitable for the airline, but that the decision rested with CAI. He said CAI would ensure that Alitalia, unlike in the past, “will have a price structure comparable with other airlines.”
He said Alitalia’s load factor, the indicator of how well it manages to fill its flights, had been falling for years, and had “understandably collapsed” in recent months.
“I suppose that an international alliance will aim at ensuring a satisfactory load factor,” he said.
Italian media say the French airline is likely to edge out its German rival, but sources close to CAI have cautioned that no decision has been made so far and talks continue.
Writing by Deepa Babington and Gavin Jones, editing by Will Waterman, Bernard Orr