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Aviation History
1986
1986 - 0973.PDF
t Alitalia's average fleet age in 1985, discounting the DC-9s soon to be phased out, was 21 years, compared with 8-6 years in 1980. Pavolini says. "Advance bookings are down in April and May, but we have no doubt the peak season will be good. Our main market—visiting friends and rela tives—is not as susceptible to the threat of terrorism as tourists are," he adds. Alitalia's investment programme over the next few years is heavy. Its working capital and internally generated funds have in the past been able to withstand 80-90 per cent of re-equipment costs, says Luciano Sartoretti, managing director, finance. Last year asset sales topped L185,000 million ($120 million). "We plan to remain at a very high self-financing level, although as our own fleet becomes newer this may not be possible." Alitalia's debt has been trimmed and reshaped. Last year it borrowed L180,000 million and 100 million ECUs to pay back $93 million owed to the US Exlm Bank. By the year's end, says Sartoretti, "we had changed our position quitedrastically, from an 86 per cent dollar debt to 33 per cent in each of Lira, ECUs, and dollars". "In abso lute terms, our total long term debt decreased by L150,000 million," he adds. "These debts have a life of seven to nine years—you must spread the risk." Lira borrowing costs are higher, but there is no exchange rate risk. Look at what hap pened to Lufthansa, Pavolini points out. It bought dollars in advance and the dollar then fell. Privatisation has been shouted about several times, but noticeably not by Alitalia. The main state shareholder, IRI, has steadily and quietly been selling off some of its holding over the past year. Under Italian law the national carrier cannot be more than 33 per cent privately owned, on the basis that private shares could fall into foreign hands. Net equity stands at L420,000 million, half in common shares and half in prefer ence shares, of which 16 per cent and approximately 25 per cent respectively are now denationalised—over 20 per cent of the company. Another 5 per cent has been set aside to cover IRI bonds issued with an Alitalia warranty which expire in 1989. The balance, to reduce the state holding to 67 per cent, will be sold as soon as the common shares are quoted—probably this month. New issues will be made later this year, and again in 1987. By the end of this year, says Sartoretti, the debt:equity ratio should be practically 1:1. In 1980 it was around 7:1. Will private ownership make any dif ference to Alitalia? To running the airline, no, says Sartoretti. "All it means is that we have to mail reports to 35,000 new share holders and buy a new computer to do so," he complains. Antonio Fileccia, general manager of domestic marketing, argues that it is good for morale and industrial relations. "The injection of private capital gives a reason to implement efficiency measures," he comments. "The outlook is better and the workers happier. "We firmly believe that Alitalia has overcome its bad image," Pavolini insists. "The reputation of Italy as a whole for strikes and lack of punctuality was affecting the airlines too. But we agreed a three-year contract with the unions at the beginning of 1985, so it should be quiet for another two years," he ventures. But Alitalia has a problem. It is hit by air traffic control strikes, customs strikes, and refuellers' strikes, as well as by its own temperamental pilots. "If the coffee machine breaks down we could have a strike situation," quipped an engineer. MD-80s and DC-9s are good in a strike, says Maintenance Centre co-ordinator Giuseppe Gaggiotti. They have their own steps, so we use them when ground handling staff are out. We often switch an Airbus for a McDonnell Douglas if that is the case, he says. • FLIGHT INTERNATIONAL, 26 April 1986
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