State underwrites struggling Alitalia

The Italian government wants to retain a 51% stake in Alitalia for another two years. Currently, the state owns 53% of the airline. The move has put an end — at least for the time being to the protracted wrangling about the privatisation of the airline, which, in the year 2000, led to Alitalia’s spectacular ‘divorce’ from former partner KLM Royal Dutch Airlines. This move, which has the sanction of the labour unions, always a force to be reckoned with in Italy, is compatible with the longterm aim of putting the airline on a sound financial
footing, a prerequisite for a successful privatisation.
The two year timeframe corresponds to the duration of the cost-cutting <<industrial
plan> 2002—2003 which Alitalia’s management adopted at the end ol last year. It is part of the business plan 2000-2006 and was modified in the aftermath of the events of September 11 last year.
According to well-in-formed sources, Alitalia requires additional funding of around EUR 1 billion. The airline has already received a final, third tranche of EUR 390 million from the ongoing refinancing plan.
This refinancing scheme was approved by the EU Commission. And evidently, its approval is the reason why the Italian government, and more specifically labour minister Roberto Maroni, industry minister Antonio Marzano, transport minister Pietro Lunardi and cabinet undersecretary Gianni Letta, have put the privatisation of Alitalia on hold for another two years.
The EU Commission’s competition regulators are keeping a very close eye on the member states to make sure that they do not subsidise their airlines.
On the other hand, the EU draws a clear distinction between subsidies and investment — when the state acts in its capacity as shareholder, for instance. Last year. 6.6% fewer passengers (26.7 million) boarded Alitalia aircraft than in the year-earlier period. The passenger load factor dropped to 70.8% (-1.3%).Alitalia Cargo offered 2.26 million tonne
kilometres (-9.7%), of which it sold 1.53 million (-12.2%).The load factor therefore fell to 67.6% (-2%) compared to the previous year.