May 17, 2017 / 11:25 PM / 2 years ago

Italy kicks off Alitalia sale process

MILAN (Reuters) - Alitalia went on the auction block on Wednesday, as Italy kicked off the process of finding a buyer to save the money-losing flag carrier.

An airplane of Alitalia approaches to land at Fiumicino international airport in Rome, central Italy, May 3, 2017. REUTERS/Max Rossi

In a document signed by government-appointed commissioners, Alitalia said offers from single companies or consortia had to be presented by June 5. Bids could be to buy the whole company, restructure it, or acquire assets and contracts.

Alitalia was put under special administration earlier this month for the second time in less than a decade after workers rejected its latest rescue plan.

Rome has ruled out re-nationalizing Alitalia, once a symbol of Italy’s post-war economic boom, which is struggling to compete at home against low-cost carriers and high speed trains. It has not invested sufficiently in higher-margin long-haul routes to revive profits.

The government appointed three commissioners to assess whether Alitalia can be restructured or liquidated, and has given them six months to come up with a plan.

Rome also threw the airline a short-term lifeline with a bridge loan of 600 million euros to see it through the process.

As of Feb. 28, the airline had debts of around 3 billion euros, liabilities of 2.3 billion euros and assets of 921 million euros.

Alitalia’s balance sheet will be scrutinized over the summer by the three commissioners, who have promised to devise a new industrial plan by July.

They have said that the airline’s above-market costs, especially for leasing, fuel and maintenance, have to be slashed to attract buyers.

Rival airlines including Lufthansa (LHAG.DE), Norwegian Air (NWC.OL), Air France-KLM (AIRF.PA) have shown no interest in buying Alitalia. Local media have cited Qatar Airways as one of the few potential buyers. The Gulf carrier has declined to comment.

Former Prime Minister Matteo Renzi, who regained the leadership of the ruling Democratic Party in April, is using his international contacts to help find a potential partner, a source told Reuters.

Non-EU players cannot own more than 49 percent of a European airline, which limits an investor’s ability to run a carrier and discourages buyers.

Italian Transport Minister Graziano Delrio said this week that the limit was “unrealistic” and that talks to overcome the cap were at an advanced stage.

EU legislation is unlikely to be changed in time to help Alitalia, for whom the commissioners hope to secure binding interests by October.

Reporting by Agnieszka Flak and Stephen Jewkes in Milan and Alberto Sisto in Rome; Editing by Richard Chang

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