THE BOARD of debt-ridden Alitalia yesterday threw in the towel after almost a decade of losses and government bailouts, requesting bankruptcy protection in a move that will pave the way for the break-up of the Italian flag carrier and its proposed relaunch by a consortium of Italian investors.
Corrado Passera, chief executive of Intesa Sanpaolo, the bank advising Alitalia and a prospective shareholder in the new airline, confirmed that the request had been formalised.
Silvio Berlusconi's centre-right government, which fixed Italy's bankruptcy laws to smooth the process and blocked a foreign takeover, was expected to name law professor and former minister Augusto Fantozzi as administrator.
The consortium of more than a dozen investors, led by Roberto Colaninno, a turnaround industrialist who runs scooter-maker Piaggio, intends to resurrect a slimmed-down Alitalia and merge it with Air One, its smaller rival.
Mr Colaninno, set to be chairman of the new Alitalia, will be one of the three largest shareholders alongside the Aponte and Benetton families, each investing up to €150 million out of a total of at least €1 billion.
Alitalia's debts of more than €1.1 billion and its loss-making divisions, including cargo and heavy maintenance, will be left with Mr Fantozzi to liquidate.
Analysts expected the board to announce first-half losses of more than €400 million.
The break-up process could take more than a month. The consortium has not made public how much it intends to offer.
The government owns 49.9 per cent of Alitalia, which first flew 61 years ago.
Trade union leaders have responded coldly to reports that up to 7,000 of 18,000 jobs will be cut, and that labour contracts must be renegotiated as a precondition for the sale. They also concede that they have little bargaining power, having rejected a similar takeover offer by Air France-KLM in April.
The business plan to revive Alitalia, devised by Intesa Sanpaolo, projects losses for the new Alitalia of €260 million in 2009 and first profits in 2011, projected to reach €200 million in 2013.
The Italian investors hope that either Air France-KLM, which has expressed conditional interest, or Lufthansa will take a minority stake.
- (Financial Times service)
