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Alitalia seeks bankruptcy measure



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Alitalia seeks bankruptcy measure
cyrano Offline
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Alitalia seeks bankruptcy measure

Troubled Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival.
The carrier has sought court protection from its creditors, effectively declaring itself insolvent.
An administrator will be appointed to handle the process, with flights continuing while the firm plans a radical overhaul of its operations.
Losing 2m euros (£1.6m) a day, Alitalia has survived on a 300m-euro state loan.
Plans are being drawn up to split the carrier into two and to sell a stake in a new entity to a foreign airline.

Split in two
Guaranteeing the airline's future will depend on securing fresh investment and persuading its unions to accept large job cuts.
Both Air France KLM and Lufthansa have expressed interest in investing in any new entity which emerges from the current business.

Earlier on Friday, Corrado Passera, head of the airline's financial advisers Intesa Sanpaolo, confirmed that Alitalia's board was drawing up a request to seek bankruptcy protection.
The move will give the firm breathing space to reach agreement on how the business can proceed.
The government adopted new measures on Thursday aimed at speeding up bankruptcy proceedings, widely interpreted as a signal that Alitalia was set for such a course of action.
Future plans for the carrier would see it divided in half, with its loss-making operations remaining under bankruptcy protection and potentially being liquidated.
Profitable short-haul routes would be separated into a new business, controlled by a consortium of Italian investors including budget airline Air One which would effectively be merged with Alitalia.
Italian media have speculated that the new firm will employ 7,000 fewer staff than Alitalia's current 19,000 strong workforce and operate flights to about 50 fewer destinations.

Italian ownership
Prime Minister Silvio Berlusconi has made Alitalia's continued ownership by Italian interests a precondition of any rescue deal.
However, experts have said the airline - of which the government owns 49% - can only survive in the future as part of some European alliance.

Previous attempts to sell the business to a foreign airline have foundered over union concerns about job losses and unease over the severity of the airline's financial problems.
The airline's perilous position was put into perspective by Roberto Colaninno, appointed to take charge of the new entity that emerges from the restructuring.
"No one can buy Alitalia in the state it's in," he told La Repubblica newspaper.
"With all respect, I am not Merlin the magician. The business is toast. It doesn't exist any more. There's nothing left."
Alitalia has been crippled in recent years by strategic indecision, poor industrial relations and soaring fuel costs.
Its shares were suspended earlier this summer while the firm has delayed the release of its 2007 accounts.
08-30-2008 10:38 AM
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cyrano Offline
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RE: Alitalia seeks bankruptcy measure

Alitalia: Investors withdraw $1.4B lifeline

ROME, Italy (CNN) -- A group of Italian investors has withdrawn its €1 billion ($1.4 billion) offer to save Alitalia -- putting the future of Italy's flagship airline in serious jeopardy, the company's board of directors said Thursday.

The offer was rescinded after the trade unions refused to accept the overall business plan to rescue the stricken airline.

The unions were given a 3:50 p.m. (1350 GMT) deadline to accept the plan. Instead of accepting or rejecting it, they sent a letter with a counteroffer, essentially offering to work longer hours for the same salaries, but requesting fewer layoffs.

The board of directors voted to turn down their counteroffer.

Withdrawing the offer does not mean Alitalia will be grounded immediately. But what happens next is a matter of speculation.

The government special commissioner who was put in charge of Alitalia when the company declared bankruptcy at the end of August may have little choice but to begin the liquidation process.

However, some analysts and observers point out that before liquidating the company, the special commissioner would have to ensure that there are no other buyers interested in purchasing the airline.

It is the third attempt to sell the airline that has failed since the previous government decided to privatize the airline nearly two years ago.

Italian Prime Minister Silvio Berlusconi, who had said he was confident that a solution will be found, said the situation is "dramatic." "We have reached the edge," he said after the deal was pulled.

He said before the investors backed out that the airline's 20,000 workers should not expect generous financial packages in the event of liquidation.

Trade union representatives say they are ready to take a temporary pay cut to ensure Alitalia continues operations, but that seems to be an offer to make sure public opinion does not blame them for running Alitalia into the ground.

Without the offer, Alitalia is left with only 30 million to 50 million euros in cash -- enough money to supply fuel for a few more days at the most. This means planes could be grounded sooner rather than later.

There were no immediate reports of cancellations or delays of Alitalia flights.

Another possibility is that Italian civil aviation authorities could suspend Alitalia's license to fly on the grounds that it cannot ensure regular flights.
09-19-2008 07:20 AM
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cyrano Offline
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RE: Alitalia seeks bankruptcy measure

Alitalia may lose licence to fly

Italy's civil aviation authority ENAC says it will withdraw Alitalia's operating licence this week unless it presents a cost-cutting rescue plan.
The country's debt-laiden flag-carrier is currently flying with a provisional licence, according to ENAC's president Vito Riggio.
"If the financial plan doesn't arrive in three to four days the licence will be suspended," he said.
ENAC is meeting the troubled airline's special administrator on Monday.

Flight threat
Alitalia is estimated to be losing more than 2m euros ($2.9m; £1.6m) every day, but an attempt to reach a deal with unions and Italian consortium CAI collapsed last week.
The airline's special administrator Augusto Fantozzi is poised to make an appeal for rescue bids.
"We will proceed with a public request (for offers)," Mr Fantozzi told Il Messagero over the weekend.
"It will formalise what I have been doing - without any results so far despite all my efforts - regarding the main assets."
Without a rescue, Alitalia flights could be grounded within a week to 10 days. Last week, the airline cancelled a number of flights from Rome's Fiumicino airport amid rumours it could no longer afford to buy aviation fuel.

Union resistance
Alitalia has been in financial trouble for years.
The possibility of a takeover by Italian investor group CAI collapsed last week after the offer was opposed by six unions, who were unhappy at plans to cut 3,000 jobs. Three unions had backed the offer.
Earlier this year, unions had also blocked Air France-KLM's bid to buy Alitalia.
Under European competition rules nationalisation of the airline is not permitted.
At the weekend, Silvio Berlusconi said there was little chance of finding a foreign bidder.
"The other big flag carriers aren't interested in getting Alitalia out of trouble," he said in a TV interview.
Mr Berlusconi said he still hoped that a solution could be found, but conceded that the airline could be "heading towards bankruptcy procedures".
09-22-2008 11:34 AM
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