Alitalia cut losses in 2007

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Alitalia cut down pre-tax loss losses in 2007 to €363.9 million ($530 million) but warned about a worse-than-forecast performance in 2008.

Alitalia’s performance was due to a strong fourth quarter. During the three-month period to 31 December 2007, Alitalia reduced its operating loss to €56 million from €293 million in the last quarter 2006, which was affected by fleet write-downs.
Last year Alitalia saw traffic revenues fall fractionally over the year to €4.36 billion. Total operating revenues however slightly increased 2.8% to €4.85 billion.

Fuel costs in 2007 amounted to €1.03 billion, showing a €20 billion increase over the previous 12 months. During the fourth quarter, fuel costs soared €49 million to €287 million.

However total operating expenses for the year 2007 were down €131 million to €5.05 billion euros compared to 2006. During the fourth quarter of last year, Alitalia Group reduced its total operating expenses by €187 million to €1.33 billion.

At an operating level, Alitalia cut losses by €262.8 million to €202.9 million – again largely reflecting the inclusion of the aircraft write-down in 2006.

During 2007, Alitalia’s unit revenue fell 3.4% compared to 2006, as the carrier blamed increasing pressure from low-cost carriers and unfavourable exchange rates for the intercontinental sector.

Alitalia repeats its recent warning that additional cutbacks will be necessary this year as its forecast for 2008 is worse than originally projected under its survival plan, largely due to the impact of high fuel prices and delays in implementing its restructuring measures.

The airline has already indicated it will require a capital injection of €750 million, envisaged for mid-year, and will need to complete the disposal of assets set out its in 2008-10 survival plan.

It notes that if its assumptions and objectives are fully achieved this year, its liquidity can be maintained at positive levels – albeit considerably reduced – for the full year even without the capital increase.

“However the situation is difficult to sustain from the operational point of view, bearing in mind that the above extraordinary operations, while waiting for the full start-up of the summer season, will only partly offset the structural time lag between receipts and payments,” it says.

Net financial position on 31 December 2007 amounted to €1.16 billion showing an increase of €174 million compared to 31 December 2006.

Group’s net debt as of 31 December 2007 amounted to €1.19 billion, with a slight increase in net indebtedness of €8 million compared to 30 November 2007.

Net debt of the parent company Alitalia as of 31 December 2007 amounted to €1.18 billion, compared with €928 million at 31 December 2006.

Group’s cash-to-hand and short-term financial credits at the end of last year amounted to €367 million compared with €726 million at 31 December 2006.