MILAN/PARIS: A source close to Alitalia’s biggest investor, Air France-KLM, said it was “50-50” whether it would participate in an emergency share issue to keep the near-bankrupt airline flying because the Italian carrier’s business plan did not meet its conditions.
Air France-KLM, which owns 25 percent of Alitalia, approved an emergency ¤300m ($408m) share issue along with the airline’s other investors during an all-night meeting that wrapped up after 0100 GMT yesterday.
But it is not obliged to participate in the cash call, and has always said it would attach strict conditions before giving any help. Analysts suggest Air France-KLM is dragging its feet in order to secure stricter restructuring concessions from the Italian government and other shareholders. The cash call, part of a wider bailout, is seen as only a stop-gap solution before talks on a possible tie-up between Alitalia and Air France-KLM.
Massimo Sarmi, the head of Italy’s post office, which has agreed to commit ¤75m to the capital increase, was flying to Paris to discuss matters with Air France, a second source said.
“The position of Air France-KLM is 50:50 at this stage,” the source close to the company said. “The business plan presented last week was not suitable, the conditions were not fulfilled, particularly in terms of debt restructuring. The source added, however, that Alitalia was “of strategic interest” to Air France-KLM.
An Air France-KLM spokesman declined to comment. Alitalia has not turned a profit since 2002 and came close to being grounded at the weekend after its major creditor Eni threatened to cut fuel supplies.
Rome patched together an emergency ¤500m fund, persuading the state-owned post office to commit to providing ¤75m via a capital increase and banks Intesa Sanpaolo and Unicredit to guarantee up to ¤100m, while a broader consortium of banks stump up ¤200m in existing and new loans.