Alitalia debt hits 1.19 BLN euros

| Thu, 12/27/2007 - 04:10

Alitalia debt hits 1.19 BLN eurosAlitalia said on Monday its debt last month climbed 0.8% to 1.19 billion euros, amid growing criticism of its choice of Air France-KLM as a future partner.

Passenger traffic was 0.7% higher than November of last year while cargo transport was down 5.3% from a year ago, a statement added.

Alitalia planes last month were flying at 70.3% capacity, an increase of 1% over the November 2006.

The national carrier also said that it had negotiated the sale of three slots at London's Heathrow airport which it did not consider strategic.

The sale will take place in two stages and generate some 92 million euros for Alitalia.

In other developments, union opposition mounted on Monday to the decision by the Alitalia board to recommend to the government that the Treasury negotiate the sale of its controlling 49.9% stake in the carrier with Air France-KLM.

Cgil union leader Guglielmo Epifani said he did not approve the way the board reached its decision in favor of the Franco-Dutch carrier over Air One, Italy's biggest private airline

According to Epifani, the Air France-KLM offer was incomplete because it did not deal adequately with the future of Alitalia's ground services at Milan's Malpensa airport and did not fully explain how domestic service was going to be maintained.

Similar observations were made over the weekend by the heads of Italy's two other leading unions, Cisl and Uil.

The president of the region of Lombardy, Roberto Formigoni, has branded the decision by the Alitalia board as ''madness''.

''The government is duty-bound to make public the two business plans which were presented. It is my fear that the board wants to sell the airline cheap,'' he said.

The devolutionist Northern league has threatened to ''man the barricades'' against the downsizing of Alitalia's activities at Malpensa.

In reply to the fears over Malpensa, Air France-KLM on Monday said: ''We are well aware of the importance of the Milanese airport and its role in the economy of the north. It is for this reason that our plan calls for improving the quality of the service there, especially for the business class''.

''This will be done by offering more early morning departures and evening arrivals, which are currently lacking at Malpensa. It can be a great airport without being a hub,'' Air France-KLM added.

In its business plan, Air France-KLM wants to focus on the hub in Rome.

The Alitalia board said on Friday that it felt a takeover offer by Air France-KLM offered the best guarantees for the national carrier's future.

The government said last week that it would make a decision on the board's recommendation by the middle of January.

In its non-binding offer, Air France-KLM has said it is ready to launch a take-over bid for 100% of Alitalia through a share-swap with Europe's biggest carrier.

Total investments by 2015 were put at 6.5 billion euros.

The bid by Air One, through its parent company AP Holding, offered one euro cent per Alitalia share, compared to a reported 35 cents by Air France-KLM, and included investments totalling five billion euros, one billion to boost Alitalia's capital and four to renew its fleet.

The government decided at the end of last year to sell most if not all of the Treasury's 49.9% stake in Alitalia.

An attempt to auction the stake failed this summer after all bidders dropped out because of the conditions imposed by the Treasury.

It was then decided that Alitalia management would negotiate the direct sale of the Treasury's stake.

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