EUROPE & CIS: Alitalia still bleeding and no doctor in sight

Italian prime minister-elect, Silvio Berlusconi, has promised to recruit a new bidder for Alitalia in just a few weeks but warned that ¡°painful layoff s¡± for the flagship carrier were ahead. Mr Berlusconi’s comments came a day after the Government – which owns 49.9 per cent of the moribund carrier – agreed to extend to […]


Italian prime minister-elect, Silvio Berlusconi, has promised to recruit a new bidder for Alitalia in just a few weeks but warned that ¡°painful layoff s¡± for the flagship carrier were ahead.

Mr Berlusconi’s comments came a day after the Government – which owns 49.9 per cent of the moribund carrier – agreed to extend to the carrier a €300 million (US$502 million) bridge loan, which will keep Alitalia flying for the time being. Mr Berlusconi won national elections last week but has yet to form a government; the departing government, led by Romano Prodi, agreed to grant the loan at Mr Berlusconi’s urging. But the emergency loan could be problematic. The European Union has warned Italy repeatedly that it would block any new attempts to prop up Alitalia with state funds.

An EU spokesman said Italy would have to formally seek Brussels’ approval before making the loan, something it had not yet done. If Italy goes ahead with the loan, competitors could sue to freeze it on the grounds that it constitutes unauthorised state aid. The bigger problem with the bridge loan, however, is that it is still not clear where it would lead. Alitalia’s one and only suitor, Air France-KLM, revoked its bid earlier this month amid increased union demands.