With money from a bridging loan starting to arrive, a new labour deal in place and a new commercial structure being created, Alitalia is turning its attention to becoming a private carrier by March or April next year.
The privatisation will occur as the company is recapitalised to the tune of €1.2 billion ($1.5 billion). It wants as much of this investment as possible to come from the private sector, which is essential if the Italian state's stake in Alitalia is to fall below 50% from its current 62.3%.
The Italian government has set aside €700 million in its 2005 transport budget that could potentially be used to take part in the recapitalisation, but one source says the sum is likely to be closer to €450-500 million. "The state will contribute to the recapitalisation of Alitalia but it will no longer be the owner of the airline," says the carrier.
Alitalia's privatisation was one of the conditions laid down by the European Commission (EC) in allowing the carrier to obtain a €400 million bridging loan - raised from a commercial bank backed with a government guarantee - to enable the cash-strapped carrier to keep operating until a new injection of funds. The first tranche of this money has been paid.
Now the EC is scrutinising Alitalia's recapitalisation plan to ensure it complies with European rules. The carrier says the state's potential investment is market-based and normal behaviour for any major shareholder in such a situation, so should not infringe state-aid rules.
However, a group of eight European carriers, including British Airways, Iberia and Lufthansa, have written to the EC questioning whether the restructuring of Alitalia is being planned "in a way to again violate or circumvent EC state-aid rules". They are concerned that the Commission is "exclusively focusing on the reduction of the state's share as a means to avoid future state aid".
Also, they worry that Alitalia's current €1.6 billion of debt will be loaded onto AZ Services, one of the two companies into which Alitalia is being divided under the restructuring. AZ Services will contain areas such as the airline's maintenance, airport services and IT functions, while AZ Fly will conduct all of the flight operations. AZ Fly will own 51% of AZ Services, with the rest owned by state holding company Fintecna.
The carrier group says this construction is intended to separate the profitable and non-profitable parts of the business and "channel the debt into AZ Services and to indirectly transfer it to the state". However, Alitalia asserts that all of its debt will remain with AZFly and will not be transferred.
The carrier also stresses its strategic partnership with Air France is important for its future and that suggestions of an alternative link with Lufthansa are not credible. Chief executive Giancarlo Cimoli "has made it clear that Alitalia is working continuously with Air France", says the airline. Cimoli told a recent parliamentary hearing that losing its commercial relationship with Air France could cost it €80-100 million.
The urgency of Alitalia's turnaround is underlined by its €299 million operating loss for the six months to June, 12% worse than in the same period last year.
MARK PILLING LONDON
Source: Airline Business
