A cynic might say that Alitalia wants to have its cake, eat it and then complain about the recipe; the carrier is being accused of misusing state funds just as it pushes for softer state aid conditions.
State holding company IRI said in November that it would reduce its 86.4 per cent stake in Alitalia to 60 per cent. IRI's plan is for Alitalia employees to take a 20 per cent stake and private investors to take up new shares in March/April 1998. That could replace the final L750 billion (US$434 million) of Alitalia's L2.8 billion capital injection, due from IRI.
IRI hopes the sale of 1.4 billion Alitalia shares will raise L340 billion and free Alitalia from some of the state aid conditions attached to Brussels' approval last July.
Alitalia cannot, however, expect its state aid sentence to be eased for good behaviour. The Commission is now debating whether to reopen an investigation into Alitalia's state aid following allegations of a misuse of funds. Rival airlines, said to include Alpi Eagles, British Airways and Air One, claim Alitalia has been using aid 'blatantly' to cut prices on domestic routes. Alitalia reduced fares by some 30 per cent on all domestic routes in August 1997. Alitalia declines to comment.
Alitalia may be floundering on regulatory rocks, but its alliance strategy is shaping up. Alitalia was due to decide by the end of 1997 on an alliance partner, from a shortlist of KLM, Air France and Swissair.
A link-up with favourite KLM would make strategic sense. Alitalia needs aircraft, know-how and financial support to develop its new hub at Milan/Malpensa. KLM, constrained at Amsterdam/Schiphol, needs a second European hub where it can grow.
Lois Jones
Source: Airline Business
