Italian charter carrier Air Europe is preparing for an initial public offering, while flag carrier Alitalia is still on the lookout for private investors.

Air Europe is to float 35 per cent of its shares on the Milan stock exchange and in 'several markets abroad' by December this year, says president Lupo Rattazzi. Italian merchant bank Sopaf will be the lead manager of the issue and is in the process of selecting a co-global coordinator.

Air Europe hopes that the flotation will raise US$45 million for use for fleet expansion. The airline means to buy two Boeing 767-300s by 1999 to substitute two leased B767s and will lease B757s for new charter destinations to Egypt, the Canaries, Kenya and Zanzibar in 1998.

Rattazzi maintains that future expansion will be limited to leisure services, despite the airline's move into the scheduled sector with the launch of a Milan-Havana service planned for 26 October. Air Europe's sales will reach approximately US$240 million this year, with profits exceeding last year's US$3.8 million, Rattazzi predicts.

Alitalia's financial position is not so healthy. Rattazzi suggests the flag carrier may use the flotation as an opportunity to sell its 24 per cent stake in Air Europe as 'Alitalia's in dire need of the cash.' But Alitalia denies it will sell its stake.

The troubled Italian carrier is still seeking private investors, despite the recent approval of L2,750 billion (US$1.8 billion) in state aid. Alitalia is understood to have approached US investment banks Salomon Brothers and Merrill Lynch to act as advisers, while KLM concedes it is holding talks with Alitalia over 'possible forums of cooperation that don't exclude investment'.

Lois Jones

Source: Airline Business