Alitalia looking to create bad company to woo Etihad
The airline came close to bankruptcy in 2013 before it was rescued in a government-engineered capital injection
Italian airline Alitalia is considering creating a separate company to hive off its bad debts and appease Gulf-based suitor Etihad, Il Messaggero daily said on Saturday.
The plan was discussed at a meeting in Milan on Friday between executives of the loss-making airline and four Italian banks, including UniCredit and Intesa Sanpaolo , the paper said.
Alitalia, which was privatized in 2008 under a plan that also involved spinning off unprofitable activities into a "bad" company, has been unable to make a profit ever since and is burning around 1 million euros ($1.4 million) of cash a day to keep flying.
The airline, which has struggled to compete with low-cost carriers and high-speed trains, came close to bankruptcy in 2013 before being rescued in a government-engineered capital injection.
Under the plan to woo Etihad, the new bad company would take on the majority of Alitalia's debt, amounting to more than 800 million euros, and around 3,000 staff, the paper said.
Etihad is looking to buy up to 49 percent of the Rome-based airline but does not want to absorb all of Alitalia's debt. It has also asked that Alitalia's 14,000 staff are cut by up to 3,000, several sources close to the situation have told Reuters.
However, the bad company idea may face resistance as Italian financial daily Il Sole 24 Ore said Alitalia's creditor banks do not look favorably on the prospect of creating a separate company to hold the bad debt, since this would likely expose them to greater losses.
Il Messaggero also said Alitalia's remaining "good" company would see a capital injection of 560 million euros by Etihad and of 200 million by Italian investors.
Alitalia Chief Executive Gabriele Del Torchio is flying to Abu Dhabi early next week to meet his counterpart at Etihad, several Italian papers said.
Etihad declined to comment. It was not possible to reach Alitalia or Intesa for comment. UniCredit had no immediate comment.