TOM GILL ROME
Struggling Alitalia received a boost when the European Commission (EC) approved its final L750 billion ($350 million) of state cash, but there are doubts whether this will now be enough.
Transport commissioner Loyola de Palacio warned there would be no more state money for the carrier after this long-delayed last tranche of the carrier's agreed L2.75 trillion aid package.
Pietro Lunardi, Italian minister for transport and infrastructure, said that L750 billion is simply "not enough", adding the company needs anotherL3 trillion in total. But the source of such funds is unclear. The government says it still intends to complete the privatisation of the airline, and has shown no inclination to step in with additional money, as some unions are demanding. Economy Minister Giulio Tremonti has iterated his commitment to stick to EU guidelines on state aid.
The government holds a 53% stake in the airline, which was already heading for substantial losses before the terrorist attacks in New York. Since then, Alitalia has announced a capacity cut of 14%, laid off 2,500 staff and frozen aircraft orders.
Alitalia chief executive Francesco Mengozzi told the Italian parliament passenger traffic has fallen by 30% since 11 September, and that the outlook is getting worse. He had been preparing to reveal a new business plan early last month, but in light of the industry's new circumstances the airline is being given time to make further amendments.
The board has given Mengozzi the go-ahead to update the plan to cover just 2002-3, rather than the full four years originally envisaged. Details of the original plan have leaked out, however. The Italian press reports that Alitalia will begin to restore the status of its Rome Fiumicino hub because of low demand on feeder routes into Milan Malpensa. So it will offer more non-stop flights from Rome, although the majority of its inter-continental flights will continue to operate from Milan. Other aspects of the plan are likely to see a renewed emphasis on its core business, with the sale or transfer of non-core activities and cost reduction and efficiency measures.
Since a state bail-out is a difficult proposition, help from the private sector appears crucial. Paolo Sinigalia, the chairman of Italian regional carrier Alpi Eagles, is presenting himself as Alitalia's saviour. He says he is looking for shareholders to create a consortium to purchase up to 30% of the airline.
The deep-pocketed Benetton Group seemed an obvious candidate for such a venture. It recently bought a stake in Alpi Eagles and has declared an interest in owning a network of Italian regional airports as well. However, it has indicated it is not willing to provide additional capital to the regional airline to help in the acquisition of the flag carrier.
Alitalia will probably end up as part of a consolidation in the European airline sector based around three large carriers, according to Jürgen Weber, chief executive of Lufthansa.
Mengozzi has not gone out of his way to calm concerns about the airline's future. "The process of consolidation between airline companies was already under way, but this crisis could dangerously accelerate it," he said.
Source: Airline Business
