EU backs proposed Alitalia takeover
BRUSSELS, Belgium (AP) — The European Union’s transport chief on Wednesday approved the proposed takeover of bankrupt Italian airline Alitalia by a group of investors, lauding its rebirth as the latest move to change the EU airline sector from an inefficient state-driven industry to a competitive privatized one.
In announcing the decision, EU Transport Commissioner Antonio Tajani said Alitalia would still have to repay a 300 million euro ($380 million) rescue loan to the Italian state since it had received such aid during previous bailout attempts.
It remained unclear how the bankrupt company would proceed to repay the loan and whether new investors would want to take on such an added commitment.
Tajani said the sale of Alitalia’s assets to a group of private investors would not be illegal, and that it will lead to the emergence of a new Italian airline “smaller in size but more efficient.” He said it could help shake up the European airline market by providing more competition and choice for air travelers.
“I am convinced that a new, more dynamic air transport market will be able to develop in Italy,” Tajani said.
“We are going beyond the old model of national, state airlines. What we see now emerging is a new model involving airlines entirely in private hands,” he added. Tajani also pointed to Greece’s Olympic Airlines SA, for which he approved privatization plans only last month.
For decades, scores of European airlines were state owned, loss making, and employed a bloated work force. They held virtual monopolies which made flying overly expensive. Only in the past dozen years have EU state aid rules forced the industry to privatize, but not without causing serious social upheaval.
Alitalia is a case in point. The airline canceled dozens of flights for a third straight day Wednesday because of labor unrest, leaving customers scrambling.
Italian Premier Silvio Berlusconi has branded as “irresponsible, unacceptable” Monday’s wildcat walkout by an estimated 300 Alitalia workers. Unions for Alitalia pilots and flight attendants have refused to accept the rescue plan by Italian investors, which includes cutting the work force and the number of flights and routes.
CAI, the consortium of Italian investors set up to salvage the carrier, would take on debts and make cash payments for a total of 1 billion euros ($1.29 billion) in return for taking ownership. CAI’s binding offer, which was presented last month, is valid until Nov. 30.
Alitalia said that under the deal CAI would buy 64 of its aircraft and acquire the leasing contracts for another 29. Alitalia has a fleet of 173 planes.
The new carrier would also be paying for the old Alitalia’s landing and takeoff rights as well as its trademarks.