Alitalia risks bankruptcy without capital increase: source

Tue Oct 8, 2013 5:29pm EDT
 
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By Giselda Vagnoni

ROME (Reuters) - Loss-making Italian airline Alitalia CAITLA.UL risks having to file for bankruptcy if it fails to agree a deal for a capital increase in the next couple of weeks, a government source said on Tuesday.

Alitalia needs about 500 million euros ($680 million) to stay in business and invest in a new turnaround strategy, analysts have said, after accumulating losses of more than 1 billion euros and debt of a similar size since being rescued from bankruptcy in 2009.

Its shareholders, a disparate group of 21 Italian investors including bank Intesa Sanpaolo (ISP.MI: Quote) and road operator Atlantia (ATL.MI: Quote), will vote on a capital increase of at least 100 million euros on October 14 to keep the business running as it seeks fresh bank financing and a longer-term solution to its financial plight.

"Alitalia risks filing for bankruptcy if no solution on the capital increase is found in a couple of weeks," the source told Reuters.

The airline has also fallen behind in its payments for fuel, suppliers have said, and could face the prospect of having to ground its fleet.

"In four or five days Alitalia risks not being able to fly," the government source added.

The company said on September 26 that it had total available cash of 128 million euros, including unused credit facilities.

Such a sum would not last long. Andrea Giuricin, a transport analyst at Milan's Bicocca University, estimates that Alitalia needs at least 10 million euros a day to keep its aircraft flying and has annual operating costs of at least 3.7 billion euros.   Continued...

 
An Alitalia plane passes an Air France plane on the tarmac of Charles de Gaulles International Airport in Roissy near Paris, January 8, 2013. REUTERS/Charles Platiau