Italy’s Government is to grant a €300 million ($480 million) loan to flag-carrier Alitalia in a bid to keep the crippled flag-carrier operating in the wake of the collapse of Air France-KLM’s proposed takeover.
The decision follows a specially-convened urgent ministerial meeting at Rome’s Palazzo Chigi, chaired by outgoing prime minister Romano Prodi and attended by finance minister Tommaso Padoa-Schioppa.
Ministers have drafted an emergency decree providing Alitalia with €300 million to enable it to cope with “immediate liquidity needs” and “maintain operational continuity”.
In a statement the Government adds that the loan is “very short term” and must be repaid, with interest, by 31 December.
“This measure is intended to ensure, for the time necessary, essential public service,” it says. “The intervention also aims to avoid jeopardising the conclusion of the process to privatise Alitalia until the new Government assumes its powers in full.”
Alitalia had been seeking a €300 million interim credit line last month, the granting of which was among a set of conditions contained in the Air France-KLM acquisition proposal.
The European Commission is expected to examine closely any financial support given to Alitalia to ensure that it complies with restrictions on state aid.
Air France-KLM halted the acquisition process earlier this month after failing to secure the backing of Alitalia unions and, yesterday, it effectively scrapped the takeover plan.
Alitalia has been burning cash at an alarming rate and, with no alternative bidder immediately prepared to rescue the airline, it has been facing the possibility of seeking creditor protection.
Source: Air Transport Intelligence news