British Airways Flies Closer To Alitalia

British Airways may be considering a partnership with ailing Italian airline Alitalia, but it’s not alone.

British Airways may be considering a partnership with ailing Italian airline Alitalia, but it’s not alone.

Last week, Roberto Colaninno, the man expected to become the chairman of Alitalia and the current chairman of scooter maker Piaggio, said that he was in talks with Air France-KLM and Germany’s Lufthansa about taking a stake in a new version of Alitalia, which would be stripped of its unprofitable assets and debts.

Yet some are surprised that a foreign partner is now involved in the bailout of Alitalia since Prime Minister Silvio Berlusconi has said in the past that he was eager to keep the company in Italian hands. Alitalia is 49.9% government owned. Air France-KLM, for its part, walked away from Alitalia in April because it had failed to secure support from Berlusconi and the airline’s unions. Lufthansa explicitly denied last week that it was interested in helping to bail out Alitalia.

Foreign involvement aside, a group of 16 Italian investors, including the Colaninno and Benetton families, are reportedly planning to buy the profitable assets of Alitalia–including its newer planes and airports slots–and invest 1.0 billion euros ($1.5 billion) in the company. The airline will merge with Air One, a rival carrier owned by Carlo Toto, an Italian businessman who made an unsuccessful bid to buy the airline last year. Alitalia’s failed assets and debts will then be put into a separate company for liquidation.

Bankruptcy proceedings were expected to begin on Friday, while Alitalia’s board was scheduled to meet to approve the airline’s results for the first half of the year.

According to Alitalia, it has been losing between 1 million euros and 2 million euros a day ($1.5 million and $2.9 million, respectively).

Reports have been circulating that British Airways will forge an industrial partnership with Alitalia, though it is unclear whether the U.K. airline would eventually also take a stake.

Consolidation in Europe’s airline industry has been growing recently. BA, Air-France and Lufthansa are all trying to snap up second-tier airlines that are seeking investors, even considering potential partnerships with carriers they have shunned in the past. Lufthansa said Thursday it is in talks to buy a 45.0% stake in the parent of Brussels Airlines for 65 million pounds ($117.1 million). BA and Spain’s Iberia Lineas Aereas de Espaรฑa announced plans last month to merge.

Lufthansa has said it is also interested in buying a minority stake in Austrian Airlines, which the Austrian government is selling. Reports are circulating that Air France-KLM and BA have also expressed interest in the sale.

Last week, Berlusconi issued a decree revising Italy’s bankruptcy-protection law to protect the group of Italian investors from Alitalia’s creditors. The European Union is currently reviewing Alitalia’s rescue plan to determine whether Italy, by changing its bankruptcy law, is providing the carrier with illegal state aid.

A sale would put an end to what has become a divisive issue in Italian politics. The Prodi government’s failure to find a buyer, after a number of bidders including Russia’s Aeroflot and Air France-KLM pulled out, was successfully used by Silvio Berlusconi in his election campaign to become prime minister.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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