Alitalia saved for now: capital increase and new loans
The italians announced that they plan to raise 300 million in fresh money through a capital increase. There is also a new credit line of 200 million euros. In addition to the italian post office, the major shareholder air france-KLM and the bank intesa sanpaolo will also participate in the bailout.
Alitalia urgently needs fresh money to avert insolvency. According to the italian civil aviation authority enac, the company, which has around 14,000 jobs, is in danger of having to stop operating its 140 aircraft within days. Alitalia’s management, however, has denied that it could run out of kerosene for its planes as early as this saturday.
The post group, headed by massimo sarmi, was allowed to participate with 75 million euros in the targeted capital increase of 300 million euros in total, italian media reported unanimously on friday.
Government in rome sets conditions for state aid. A new business model and a stable shareholder structure are needed, according to the office of head of government enrico letta. The injection of funds is intended to secure the capital increase and ongoing operations.
The EU commission, which had already raised concerns in 2008, had to give the green light for state aid. At the time, alitalia had to repay 300 million euros in state aid to the government following a veto from brussel. The EU commission refused to comment on the legality of the new planned support on friday. "So far we have not received any application for approval of aid," said a spokesman for the eu commission in brussel. In principle, the airline is eligible for state aid, but it must comply with EU rules on rescue aid.
The letta government is ready to provide "strategic and financial support" as soon as the renewal and restructuring of alitalia is secured.
In the first half of alitalia’s 2013 financial year, the net loss of the floundering airline soared to 294 million euros. After the restructuring of alitalia, which was on the verge of collapse in 2008, into a private company, air france-KLM holds 25 percent, with the remainder distributed among an italian consortium with more than 20 smaller shareholders. Alitalia has lost over 1.25 billion euros since the reorganization, run by then-head of government silvio berlusconi.
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