The consolidated income statement as of June 30, 2002, reports a drop in net
loss of more than 80% compared with the first half of 2001. After taxes
totalling around å€ 47 million, net loss for the period amounts to around å€ 49
million, compared with the loss of å€ 260 million posted for the same period
in 2001.

As discussed in the quarterly report as of March 31, 2002, operating
performance confirms the effectiveness of the measures called for in the
2002-2003 Two-Year Plan. These include network restructuring and
changes in production organisation, in response to the crisis which ensued
after the September 11 attacks.

The Group’s total revenues amounted to € 2,386 million (down 12%
compared with 2001) against a 22% reduction in capacity offered
throughout the entire network, essentially in line with that called for in the
Business Plan.
Gross Operating Profit totalled € 67 million, up around € 120 million with
respect to the previous year (Gross Operating Profit as of June 30, 2001,
reported a negative balance of € 52.9 million).

Income before taxes and extraordinary items reported a negative balance of
€ 119 million, representing an improvement of € 61 million compared with
June 30, 2001.

Extraordinary items posted a positive balance of € 117 million (as against a negative balance of € 42 million at June 30, 2001) of which
approximately 65% related to net income coming from the disposal of the
Company’s “Sigma Business” division to Galileo Nederland BV (Cendant
Group). Therefore, pre-tax income as of June 30, 2002, was approximately
at breakeven point, compared to the negative amount of € 222 million at
June 30, 2001.
As regards financial position, shareholders’ equity totalled € 910 million, an
increase of € 63 million which includes the increase in share capital
underwritten by the majority shareholder (the Ministry of Economy and
Finance) for a total of € 371 million, including the € 258 payment already
made in December of last year.

Net indebtedness as of June 30, 2002, amounted to € 950 million compared
with the € 997 million posted as of December 31, 2001. Specifically, in
contrast to an increase in medium-/long-term debt of around € 163 million
due to increased borrowing linked to fleet renewal, short-term net
indebtedness improved by € 210 million.

Investments amounted to € 233 million (compared to € 409 million at June
30, 2001) of which about 10% were for intangible fixed assets, about 61%
for tangible fixed assets and the rest for financial fixed assets.
With regard to operating performance, for the first six months of 2002, the
report illustrates how the Alitalia Group focused on the process of
restructuring and reform, carried out in a sector that has indeed shown signs
of a recovery, but is still very much in the throes of the worst crisis ever to
hit the civil aviation industry, and still fraught with uncertainty. These
actions were in accordance with the guidelines set out in the 2002-2003
Business Plan, in ordinary and extraordinary terms, and the results for the
first six months of 2002 respect the timing and ways shown in the Plan’s
forecast.

Activity was developed along numerous important lines, all aimed at rapidly
increasing the efficiency of operations and at ensuring that all production
activities are involved in the planned turnaround.
Primary strategies included network restructuring and the start-up of the
joint venture with Air France. Greater emphasis was placed on networks and
markets with catchment areas for high revenue, point-to-point traffic, and on
the elimination of unprofitable routes. In this regard, it is noted that the first
half of 2002 reported an approximate 13% increase in yield compared with
the same period in 2001. At the same time, the load factor for the entire
network stood at 69.6% (compared to 71.6% on June 30, 2001), around
three percentage points higher than the Business Plan’s forecast.
Mention should also be made of the reduction in operating costs. In the face
of contrasting trends, including reductions in fuel costs and increases in
insurance costs, the Company managed an overall reduction in operating
costs of around 16% compared with the first six months of 2001, against the
above-mentioned 12% drop in total revenues.
As regards extraordinary activities, in accordance with the strategy outlined
in the Business Plan, attention focused on the Group’s core business and on
the disposal of non-strategic assets. Related transactions included the
aforementioned sale of the “Sigma Business” division. Moreover, the companies, Eurofly and Italiatour, are now in the process of being sold and
all related procedures are expected to be completed by the end of the year.
At the same time, an important real estate project was concluded on July 31,
with the acceptance of an offer for the sale of the property complex located
in the Magliana district used as the Alitalia headquarters. The related
economic and financial results will materialise during the second half of the
year. MORE DETAILS AT www.alitalia.it
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