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Alitalia Said to Consider More Than Doubling Capital Increase 2013-10-09 15:47:42.74 GMT
By Tommaso Ebhardt and Chiara Vasarri Oct. 9 (Bloomberg) -- Alitalia SpA is set to propose more than doubling a planned capital increase to about 250 million euros ($338 million) as part of a financing package to keep the airline afloat, people familiar with the matter said. The airline’s board may approve the new capital injection as soon as tomorrow, said the people, who asked not to be identified because talks are private. An Italian state entity may join existing shareholders, including Air France KLM Group, in the capital increase, which is part of a 450 million-euro refinancing accord, the people said. Italian Prime Minister Enrico Letta is fighting against time to save the airline after energy company Eni SpA said it will halt fuel supplies on Oct. 12 unless Alitalia shows it is able to continue operations. The government is seeking a solution for the carrier before tomorrow’s board meeting, said three people familiar with the matter. Letta met with Alitalia representatives and some of its investors and creditors this week in a bid to avert a collapse, according to four people with knowledge of the plan. The 450 million-euro injection would consist of a capital increase and about another 200 million euros provided in bank financing, according to the people, adding the plan is still under review. An official at Alitalia declined to comment.
Premiere Push
Letta is pushing for a state-controlled company to invest in Alitalia and ease a combination with Air France-KLM Group or another carrier, the people said yesterday. The government is also trying to persuade shareholders to approve a plan to raise capital to avoid a liquidity crunch and make Alitalia a more appealing partner after Air France-KLM, its biggest shareholder, has been hesitant to come to its rescue. Alitalia’s board will reconvene in Rome at 5 p.m. tomorrow, after the carrier said following a board meeting yesterday that it needed more time to define rescue measures. Alitalia is confident its “financial condition will improve Alitalia’s board on Sept. 26 approved a capital increase of least 100 million euros as its cash has dwindled following the heavier first-half net loss. The priority is to resolve the cash issue through new financing and a capital increase before combining with an international player, the people said. Air France is under pressure itself to cut costs, and its French subsidiary plans to eliminate 1,826 ground-staff jobs through voluntary employee departures to address weaker demand.
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--Editors: Benedikt Kammel, Jacqueline Simmons
To contact the reporters on this story: Tommaso Ebhardt in Milan at +39-02-8064-4231 or tebhardt@bloomberg.net; Chiara Vasarri in Rome at +39-06-4520-6325 or cvasarri@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at +49-30-70010-6232 or cthomas16@bloomberg.net; Jerrold Colten at +39-02-8064-4261 or jcolten@bloomberg.net