12/02/12, 14:20:29 EST

  e-mail this article

Alitalia to Be Sold by Government `Soon,' Prodi Says

bloomberg.com

Alitalia SpA, Italy's unprofitable state-owned airline, will be sold ``soon'' and the government won't oppose any of the foreign companies that have shown interest in a bid, such as Air France-KLM Group, Prime Minister Romano Prodi said.

``The sale will happen soon,'' he said in Rome yesterday at a press conference to explain the government's 2008 budget plan. ``I'm not looking at whether the bidder is Italian or foreign. I want Alitalia to be managed by a strong partner.''

Prodi first announced the sale of Alitalia late last year after the government abandoned efforts to try to turn around the carrier, which has lost more than 2 billion euros ($2.8 billion) in the past four years. The government was forced in July to cancel the auction for its 49.9 percent stake after the bidders dropped out, saying the sale conditions were too restrictive to return the carrier to profitability.

The three bidding groups led by Air One SpA, Italy's second-biggest airline; Russia's OAO Aeroflot; and U.S. buyout firm TPG Inc. have all said they remain interested if the conditions are eased. The terms of the auction called on potential buyers to respect employment levels and maintain the ``Italian'' identity of the carrier.

Mandate to Chairman

The government has now given a mandate to Alitalia Chairman Maurizio Prato to find a partner for the airline that will buy the state's 49.9 percent stake. Prato told Parliament on Sept. 25 that the airline was in a ``comatose state'' and may lose 400 million euros a year, making it urgent to find a new partner prepared will to invest in the carrier.

Several companies are interested in making bids, Prato said, adding that he would report back to the airline's board by early October with a short list of possible buyers. He expects to complete the sale by the end of this year.

``It is absolutely unrealistic to think that Alitalia might be able to start again from scratch all by itself,'' Prato told a Senate committee. The chairman also said he expects to have a clearer idea by early October of who may be interested in buying the government's stake in Italy's largest Airline.

Air France, which is also considering to make an offer for Spain's Iberia Lineas Aereas de Espana SA, will only bid for the airlines if they can meet its target of an 8.5 percent return on capital after taxes by 2009-2010, Chief Financial Officer Philippe Calavia said on Sept. 28

Alitalia shares have fallen 23 percent this year compared with a 3.7 percent decline in Italy's benchmark S&P/MIB Index. The decline has left Alitalia with a market value of 1.1 billion euros.

 Printable Version  | published Sep 30, 2007