Alitalia thrown two further lifelines

26th Sep 2008

Struggling Alitalia has been handed two more lives today following Italy’s four main unions agreeing to an investor rescue plan at the eleventh hour. Lufthansa has held talks this morning with Italy’s four main unions to discuss taking a possible stake in the consortium CAI, which could buy the assets of the troubled carrier.

Meanwhile the Italian aviation authority, ENAC, has extended Alitalia’s operating licence. It had threatened to ground Alitalia “within days” if the government-appointed administrator, Augusto Fantozzi, failed to present a deal between investors and unions. ENAC was concerned that Alitalia might not have sufficient money to pay for fuel and proper maintenance and safety checks.“For now, the feared risk of yanking the license isn’t there,” ENAC civil aviation chief Vito Riggio told reporters after evaluating the last-minute progress.
Fearful that Alitalia could be grounded any day, travellers have been deserting Alitalia, choosing other airlines or Italy’s state railways for domestic journeys.
Lufthansa, along with arch rival Air France-KLM, is vying for a share in the Italian market through a stake in Alitalia.
The investor deal lurched back to life yesterday after winning the backing of four major unions including Italy’s biggest, and talks continued today to persuade pilot and flight assistant unions to get on board.
Lufthansa declined to comment specifically on its interest in Alitalia but said its chairman was in Rome at the Italian government’s request.
Lufthansa has long said it has its eye on the Italian market but the latest meeting is its strongest demonstration yet of interest in striking an alliance with Alitalia.
Reuters reports that sources close to Lufthansa believe it could take a 20 percent stake in Alitalia, whilst a separate union source said the German airline was interested in an even larger stake.
Rival Air France-KLM, whose deal to buy Alitalia collapsed this year over union opposition, is also eyeing a stake of as much as 25 percent in the CAI consortium taking over Alitalia, Reuters reports.
Some Alitalia unions are openly supporting Lufthansa over Air France-KLM. Prime Minister Silvio Berlusconi is also expected to favour a tie-up with the German carrier after opposing Air France-KLM’s deal in the past. Berlusconi has repeatedly stressed an eventual foreign partner for Alitalia will only be allowed to take a minority stake.


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