Italy seems to be trying to force through a sale of Alitalia before any substantive restructuring takes place at the struggling flag carrier.
The Italian government, only two months after promising yet another new business plan would be presented for Alitalia in early 2007, unveiled plans in December to sell 30.1% of its 49% stake. The 0.1% part is key because under Italian law it would force the buyer to make a formal offer for the remaining shares, held mainly by investment firms and employees. The announcement of the sale plan came shortly after Alitalia held talks with SkyTeam partner Air France-KLM, described by the Italian airline as "exploratory exchanges".
Air France-KLM, which already owns 2% of Alitalia, has been coy on the issue. But its chairman Jean-Cyril Spinetta has shown no sign of budging from his long-held position that he would only do a deal with Alitalia once it was in a far healthier condition.
"I would be surprised and disappointed if Air France-KLM did a deal," says Chris Avery, a London-based analyst at JP Morgan. "They need to be very careful not to alienate the governments, so have to be polite to the politicians, and this has got them into some hot water in the City," he adds. "They are in the difficult position of trying to keep everyone happy."
Italian transport minister Alessandro Bianchi demonstrated the potential pitfalls ahead for Air France-KLM when he warned an exit price of €200 million ($265 million) would not prevent Alitalia pulling out of the SkyTeam alliance. ABN-Amro analyst Andrew Lobbenberg points out that Air France-KLM would risk losing big profits on routes from Italy to France and the Netherlands, as well as long-haul feed, if Alitalia exited SkyTeam.
Even so Morgan Stanley analyst Penelope Butcher notes the conditions attached to the sale by the Italian government, which include maintaining certain employee levels and domestic service coverage, as well as the brand and logo, are hardly likely to have buyers queuing at the door.
Italian prime minister Romano Prodi's pact with unions not to take industrial action while a new plan was devised is also looking fragile with strike action planned.
Some form of tie-up with fellow Italian carrier Air One remains a possibility, although this may well mean relinquishing slots on certain key routes, notably Milan-Rome. Italian media reports suggest Air One may work with Banca Intesa, one of Italy's leading banks, on a possible deal.
However, Banca Intesa says that "it is not building a group of investors who will take on the issue of Alitalia".
Source: Airline Business
