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Italian Airline Alitalia’s Rescue in Doubt as Atlantia Backtracks

November 19, 2019 /

MILAN, Nov 19 (Reuters) – Italian infrastructure group Atlantia said on Tuesday it was not ready to join a consortium led by Italian railway group Ferrovie dello Stato to rescue loss-making carrier Alitalia, casting a shadow on the entire project.

After months of negotiations and with just one day left before a deadline expires, the group controlled by the Benetton family said that the conditions did not exist yet for it to join a consortium working on Alitalia.

Atlantia added, however, it remained available to engage in negotiations to seek for an industrial partner for the carrier.

A deadline to present a binding offer for Alitalia expires on Thursday, after being postponed several times.

Loss-making Alitalia has been run by special administrators since May 2017 and talks led by Ferrovie have been going on for a year without a deal.

The carrier, which is burning through its cash reserves, is expected to finish its money at the end of this year.

Ferrovie and Atlantia have been in talks with both U.S. carrier Delta Air Lines Inc and, recently, with German airline Lufthansa.

Delta said it was ready to invest 100 million euros ($111 million) in the Italian carrier but sources had said it did not agree with Ferrovie and Atlantia over the development of the Italian carrier’s long-haul business.

On the other hand, Lufthansa said it was prepared to set up a commercial partnership with the Italian carrier but did not want to take a stake in the group before it has gone through a complete restructuring.

“We will not invest in current Alitalia, but we are interested being a commercial partner,” said Lufthansa CEO Carsten Spohr at an event in Berlin on Tuesday.

Italian daily La Repubblica on Tuesday said the airline could be nationalized for some years before being sold.

Analysts calculate that Italian taxpayers have spent more than 9 billion euros to support Alitalia, which has undergone two previous failed rescue attempts.

($1 = 0.9028 euros)

(Reporting by Francesca Landini; Additional reporting by Ilona Wissenbach in Berlin; Editing by Lisa Shumaker)

Alitalia Administrators Neutral on Delta, Lufthansa Offers

November 6, 2019 /

MILAN, Nov 6 (Reuters) – Alitalia’s administrators said they had no preferred option between Delta Air Lines and Lufthansa, the two groups talking with rail operator Ferrovie dello Stato about a rescue for the troubled Italian carrier.

Ferrovie, which is leading a state-orchestrated effort to rescue Alitalia, will have to choose between the two foreign carriers in the next weeks as the financial performance of Alitalia was deteriorating, the administrators said.

“We do not have any preference about the industrial partner for Alitalia, we are unbiased,” Daniele Discepolo, one of the three administrators in charge of the airline told a parliamentary hearing.

Delta and Lufthansa belong to rival respective airline alliances and are both interested in the lucrative Italian market, one of the world’s top tourism destinations which is seeing good growth in foreign visitors.

Lufthansa wrote to Ferrovie recently offering a commercial partnership with Alitalia and saying it could take a stake in the carrier under certain conditions to be agreed with other partners.

The German carrier, however, has so far refrained from indicating precisely how much it was prepared to pay and under what conditions. In the letter Lufthansa only said it could invest more than Delta, which, so far, has committed around 100 million euros ($111 million) for Alitalia.

Discepolo and fellow administrators Enrico Laghi and Stefano Paleari said the government’s planned grant of a fresh 400 million euros bridge loan was needed to keep Alitalia’s airplanes flying until the rescue was successfully finalised.

The state has already granted a 900 million euro loan for the carrier and analysts calculate that Italian taxpayers have spent more than 9 billion euros to support Alitalia, which has undergone two previous failed rescue attempts.

Paleari said Alitalia’s earnings before interest, tax, depreciation and amortisation (EBITDA) were negative to the tune of 164 million euros in the first half of this year, worsening from a 124 million euro loss in the same period last year partly due to higher fuel costs.

($1 = 0.9020 euros)

(Editing by Susan Fenton)

Alitalia Set for Temporary Reprieve as Rescue Deadline Nears

October 14, 2019 /

MILAN, Oct 14 (Reuters) – Alitalia is set to win a temporary lifeline on Tuesday, when its latest rescue deadline expires, with toll road operator Atlantia expected to give a conditional green light to hundreds of millions of euros of investment, according to two people close to the situation.

The future of the troubled Italian carrier remains in doubt with no binding offer and no clear business plan in sight but it should avoid an immediate liquidation after the expiry of the Oct. 15 deadline set by the industry ministry.

Atlantia, which is controlled by Benetton family, has been in talks since July over taking part in a government-orchestrated rescue of the airline, together with railway group Ferrovie dello Stato, the treasury and Delta Air Lines.

“Atlantia is expected to give its commitment to invest in Alitalia subject to several conditions,” one of the sources said. But issues that still cause concern range from potential antitrust problems, treatment of state aid under European Union rules, the cost of possible redundancies and the future of the carrier’s long-haul routes, the source said.

Oct. 15 is the latest in a series of deadlines set for Ferrovie and potential partners in a rescue for Alitalia, which has been under special administrators since May 2017 and needs new funds to continue flying.

The board of Atlantia, which runs Rome’s airports through its Aeroporti di Roma unit, is expected to approve a preliminary commitment to the Alitalia rescue on Tuesday, the sources said.

The rescue plans include potential investment of a total of around 1 billion euros in the carrier, which has cut costs under the special administrators but still burns cash and had only 310 million euros left at the end of September.

Atlantia is expected to invest some 300 million euros, depending on commitments from other partners.

A second source said more time was needed to iron out a complete business plan for Alitalia. Possible involvement by Delta Air Lines or Germany’s Lufthansa AG is still under discussion.

A third source said Atlantia, Ferrovie and other potential partners were under pressure from Italy’s Industry Ministry to present a binding bid and take control of the carrier which in the past two years has already received 900 million euros from the state to stay afloat.

Atlantia’s participation in the rescue was put in doubt this month when it wrote to the Industry ministry, urging a radical overhaul of the Alitalia plan if talks were to go ahead.

(Reporting by Francesca Landini, Stefano Bernabei, Giuseppe Fonte. Editing by Jane Merriman)

An Alitalia Airbus A320 takes off on September 26, 2017 from Toulouse-Blagnac airport in southwestern France. / AFP PHOTO / PASCAL PAVANI

Alitalia Rescuers to Ask for Another Delay

September 5, 2019 /

MILAN, Sept 5 (Reuters) – Companies hoping to rescue Italian carrier Alitalia will ask for a deadline for presenting their plan to be extended as they are still negotiating key aspects, two sources familiar with the matter said.

Italian railway group Ferrovie dello Stato, which is leading an effort to take control of Alitalia, is expected to ask administrators running the carrier for a “substantial” delay to the Sept. 15 deadline, one of the sources said.

It would be the sixth delay since Ferrovie expressed its interest in investing in the carrier at the end of last year.

Ferrovie, infrastructure group Atlantia and U.S. carrier Delta Air Lines have been discussing a joint plan for Alitalia for nearly two months, but they are at odds over highly-profitable North American routes, three sources familiar with the matter said.

The Italian partners in the consortium want Alitalia to have more freedom to expand its North American routes compared to what Delta is currently offering under a new cooperation agreement dubbed Blue Skies that it has set up with Air France KLM and Britain’s Virgin Atlantic.

How Alitalia would share the revenue coming from North American routes with Delta and other partners in the Blue Skies alliance is also under negotiation.

“The role of Alitalia in the Blue Skies alliance is a point of contention,” one of the sources said.

Long-haul flights to the United States and Canada account for more than one third of Alitalia’s revenue and are considered key to reviving the Italian carrier, which was put under special administration in 2017 after workers rejected the latest in a long line of rescue plans.

Administrators appointed by Italy’s government have cut costs and renegotiated plane leasing contracts to make Alitalia more efficient, but the carrier still burns cash and had been kept afloat thanks to a 900 million-euro bridging loan granted by Italy’s treasury.

Alitalia had only 410 million euro left in its coffers in July and would need fresh funds by the end of the year when it is expected to post a loss, according to another source.

Delta and Ferrovie declined to comment. (Additional reporting by Tracy Rucinski in Chicago Editing by Alexandra Hudson)

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