Malpensa Project

During the course of today`s meeting, Alitalia`s Board of Directors deeply analysed the implications of the Government`s decision to suspend the long-standing plan to concentrate flights from Linate at Malpensa Airport.

This decision was taken on 14 December, just a few hours from the date (15 December 1999) when the first group of flights was due to be transferred. The Company`s Board of Directors, while reviewing the basic elements underlying Alitalia`s Restructuring and Development Plan in which Malpensa is considered a top priority, acknowledged that all the most important strategic measures that Alitalia had to take, had been implemented, with the exception of the Malpensa Project. These measures, as foreseen by the Plan, are closely linked and are designed to achieve the three fundamental goals of the Plan:

* profitability
* size/competitiveness

* privatisation

Against this background, and after a 1999 that is below forecast - for reasons that are well-known, including the start-up of Malpensa under a penalising provisional regime - it is the Board`s opinion that the events of 14 December will seriously jeopardise the results expected in 2000. Indeed, the first quarter of the coming year could be even worse than the already critical first quarter of 1999. This in turn has determined a threat to the Alliance and to the Company`s Development Plan.

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As a result of the above, the Board of Directors has decided:


* to do everything possible to make sure that the implementation of the Malpensa Project is guaranteed by 31 January 2000 at latest, with a traffic arrangement for Milan`s airport system not substantially dissimilar from the one foreseen in the “Burlando 1 Decree” (DM 465 of 5 July 1996 n. 46T) which ensures the competitiveness of the Malpensa hub

* to develop in the meantime an action plan to minimise the short term effects of the 14 December decision.

The Board of Directors also reached the conclusion that, if the planned traffic arrangement underlying the Malpensa Project is not achieved by the said date of 31 January 2000, this could jeopardise Alitalia`s relationship with KLM and Northwest, as well as the entire Development Plan.

The Board therefore decided that, in this case, a new Plan will have to be prepared where the Malpensa Hub and hence a global dimension, will not be any longer a strategic option. Lastly, the Board of Directors granted an ample mandate to the Managing Director to identify, rapidly and by any means, any existing responsibilities on received and subsequently not respected guaranties on the Malpensa project, reporting shortly to the same Board on the consequential actions to be implemented immediately.

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