After a see-saw legal battle, the Italian government has given its approval for Alitalia to acquire low-fare airline group Volare.

The decision by industry minister Claudio Scajola was widely expected after the same Roman court that in January blocked the attempted take-over had reversed its decision in mid-March after an appeal by the flag carrier. The ministry has been overseeing the administration of struggling Volare and its long-haul Air Europe operation since the group collapsed under a heavy debt burden in November 2004. Alitalia will pay €38 million (approximately $46 million) for the carrier, in return obtaining valuable slots at Milan’s Linate airport which should help it regain domestic marketshare lost in recent years to low-cost rivals such as Air One and Volare.

But there is a sting in the tail. The government made its approval conditional upon Alitalia maintaining Volare’s operations and retaining staff levels, as at the end of 2005, for at least two years.

Alitalia may have won this latest skirmish, but it may yet face further obstacles. The acquisition still needs to be confirmed by the anti-trust authorities, and rival Air One will “not stop in the defence of its own rights”, according to the carrier. The ministry also confirmed that should Alitalia not proceed with the purchase, or the anti-trust authorities or other state bodies veto the acquisition, the authorisation will be transferred to Air One, the second-highest bidder, followed by the Meridiana-Eurofly group, assuming both will extend the validity of their bids. However, with Eurofly now in negotations to buy the Livingston Aviation Group, it looks like it has accepted the inevitable.

Air One is determined to fight on, and is likely to mount a new legal challenge. Throughout the last three months, the airline has maintained that as Alitalia has received huge state support over the past 10 years, it should be precluded from acquiring a rival carrier and calls on the anti-trust authorities to intervene.

Alitalia’s chief executive Giancarlo Cimoli has estimated that the carrier could lose revenue of €125 million ($150 million) in total by 2008 if the Volare group was sold to Air One. ■


Source: Flight International