Italy Plans to Sell Stake in Alitalia
By Alessandro Torello, Shanghai Daily | Dec. 04, 2006
Italy plans to sell a stake in unprofitable national airline Alitalia SpA to keep the carrier in business, setting up a possible takeover by Air France-KLM Group. The shares soared the most in 15 months.
"The strategic recovery of Alitalia cannot be done without the entry in the company's capital of new industrial and financial partners," the office of Italian Prime Minister Romano Prodi said in a statement on December 1. Italy's 49.9 percent stake is worth about 655 million euros (US$867 million).
Air France Chief Executive Officer Jean-Cyril Spinetta, who led the purchase of KLM in 2004, said on November 23 that "exploratory" discussions have begun on buying Alitalia, which hasn't reported an annual profit since 2002. Alitalia CEO Giancarlo Cimoli said in October the airline has cash to last about a year.
"Air France does not want yet to get involved in a situation that would imply financial risks," said Karim Bertoni, a fund manager at Banque Syz & Co in Geneva, which oversees US$18 billion. It will depend on how much Air France must pay and relations with the government and unions, he said.
Shares of Alitalia rose 9 US cents, or 11 percent, to 94 US cents at the close of trading in Milan. The stock has fallen less than one percent this year. Air France shares rose 38 US cents, or 1.3 percent, to 30.51 euros in Paris. They have gained 69 percent this year, according to Bloomberg News.
"The objective is the full recovery of the so-called flagship carrier," Enrico Letta, an aide to Prodi, told reporters after a Cabinet meeting. The state is seeking to reduce its stake to "less than 30 percent," Letta said. The government will sell between 25 percent and 30 percent of the airline, Public Works Minister Antonio Di Pietro said.
Air France had no immediate comment on the Italian government's announcement, said Brigitte Barrand, an Air France spokeswoman. Alitalia also didn't have an immediate comment.
"It seems that we are finally taking a different path that may create the conditions for an industrial recovery of Alitalia," Sult, one of the airline's unions, said in a statement on December 1.
The government's "decision opens the door for the departure of" Alitalia's CEO, "who has failed in his mission," Di Pietro said after the meeting.