Alitalia woes

Not for the first time Alitalia seems to be in a mess.  It is 25% owned by Air France-KLM, in poor health itself, after helping the Italians out of bankruptcy in 2008.

Alitalia now faces a cash shortfall of some €400m and private Italian shareholders, who also took part in the previous bailout, become free to sell their shares when a lock-up expires in a month's time.

Air France-KLM is discussing whether to maintain its stake by participating in a capital increase.  They risk upsetting unions and the Dutch side of the company by raising its stake, or risk a Franco-Italian row by turning its back on its partner in the Skyteam alliance of airlines. It has deferred a decision, saying it needed more information about its Italian partner's finances.

Any extra investment could be a hard sell with the Franco-Dutch firm's shareholders and workers, as it is in the midst of cutting costs and jobs in a bid to bring down its own debts.  But the company will also be keen to protect the value of its existing investment and maintain access to Europe's fourth-largest travel market. www.alitalia.com

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