Alitalia to go on sale in two weeks

Alitalia will be put up for sale starting in two weeks with the aim of finding a buyer for the entire airline to stave off liquidation, a senior Italian official said.

A day after Alitalia collapsed into administration, Carlo Calenda, the economic development minister, set some goals for talks around the airline’s future.

“Within 15 days the commissioners will be open to expressions of interest,” Mr Calenda said in a radio interview on Tuesday. “For us the priority is the sale of the whole company.”

This week, the centre-left government of prime minister Paolo Gentiloni extended a bridge loan of €600 million to keep Alitalia afloat for the next six months, but ruled out nationalisation.

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This will give Luigi Gubitosi, Enrico Laghi and Stefano Paleari, the commissioners appointed by the government, breathing space to craft a strategy to minimise losses to prevent a grounding of its fleet and to manage the sale.

There is a deadline on the horizon: Mr Calenda has said the €600 million loan would be the “maximum” of state aid on offer, which should last for about six months.

In recent days, there has been growing media speculation about potential buyers, among them Lufthansa, the German flag carrier, Ferrovie dello Stato, Italy’s state-owned railway, and Qatar Airways, which has invested in Meridiana, another Italian airline.

“Any idea is welcome, but the important thing to keep in mind is that Alitalia needs an alliance with a big European group,” said Mr Calenda. “The problem is that its scale is too small.”

Deal rejected

Finding a buyer will be a challenge, and acquirers might be scared off by events of recent months. Alitalia was forced into administration after employees rejected a deal struck between the unions and management to cut salaries, personnel and other costs.

Big investors, including Etihad of the UAE and UniCredit and Intesa, the Italian banks, then withdrew their support for a €2 billion financing package they had put on the table.

Without any assurances on Alitalia’s commitment to cost cuts and a path to a profitable business model, it may be hard for any buyer to put money in.

Concerns for a deterioration in the company’s health could continue, particularly if there is a drop-off of bookings from would-be passengers worried that they may be unable to fly.

In an effort to reassure customers, Alitalia has repeatedly stated that its flight schedule would remain unchanged.

In the medium term, some analysts say low-cost carriers such as Ryanair, EasyJet, and Vueling in Italy – which were among the causes of Italia’s troubles – stand to benefit.

“A liquidation of Alitalia is now the most realistic scenario, assuming that a search for a buyer is not successful,” wrote Sven Reinke, a senior vice-president and airlines analyst at Moody’s, in a note last week.

“European low-cost carriers..have captured substantial market share in Italy in recent years and have developed strong networks that connect Italian airports with many European destinations. These airlines will profit from Alitalia’s liquidation or further retreat,” he added. – (Copyright The Financial Times Limited 2017)