Bankrupt Alitalia to get € millions of state aid from Italy’s state postal service

The near-bankrupt Italian airline Alitalia is to receive an emergency capital injection from Italy’s state-owned post office. Italy’s government did not say how much Poste Italiane SpA, the Italian postal service, would be investing – but it might be up to €100 million.  The Italian government hope the link between  Poste Italiane and Alitalia would lead to a synergy of logistics, in passengers and cargo.  Italy’s civil aviation authority had warned just hours earlier that the airline risked being grounded if new financing was not found urgently. Alitalia needs some €455 million to stay afloat. The Italian government justified what amounted to state intervention saying Alitalia was considered a national asset.   It filed for bankruptcy in August, as high staff costs, industrial relations issues and surging oil prices further dented its finances. It is being suggested that Alitalia might be able to merge with Air France-KLM to help get it out of its financial problems. Alitalia went bankrupt in 2008, and was re-launched in 2009.

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Alitalia to get aid from Italy’s state postal service

10 October 2013 (BBC)
The airline went bankrupt before – in 2008

The near-bankrupt Italian airline Alitalia is to receive an emergency capital injection from Italy’s state-owned post office.

Italy’s government did not say how much Poste SpA, the Italian postal service, would be investing.

The airline has said it needs to raise 455m euros (£385.2m) to stay afloat.

Alitalia filed for bankruptcy in August, as high staff costs, industrial relations issues and surging oil prices further dented its finances.

On Thursday the office of the Italian Prime Minister Enrico Letta said: “The government values Alitalia as a strategic asset for the country”.

Analysts estimate that Poste may inject up to 100m euros into the airline.

Many have suggested that a merger with Air France-KLM is the most likely solution to Alitalia’s woes.

However, the French group, which owns 25% of the airline, has not yet said if it is considering that option.

Alitalia went bankrupt in 2008, and was re-launched in 2009.

http://www.bbc.co.uk/news/business-24486214

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Italy taps post office to rescue Alitalia

By Giulia Segreti and Guy Dinmore in Rome (Financial Times)

10.10.2013

Full story at

http://www.ft.com/cms/s/0/f04fd64a-31c9-11e3-817c-00144feab7de.html#axzz2hbPrPPF2

…………..   Formerly state-owned Alitalia was taken out of bankruptcy in 2009 by Italian investors and Air France-KLM. It has since racked up debts of about €1bn and was losing an average of €1.6m a day in the first half of this year.

Full story on the Financial Times at

http://www.ft.com/cms/s/0/f04fd64a-31c9-11e3-817c-00144feab7de.html#axzz2hbPrPPF2

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Also

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Alitalia shareholders agree rescue package

15.10.2013 (FT)

Full FT article at http://www.ft.com/cms/s/0/bbb37398-356f-11e3-b539-00144feab7de.html#axzz2hbPrPPF2

Alitalia shareholders have agreed a rescue package backed by Italy’s coalition government that includes a €300m capital increase, partly underwritten by the state-owned postal services operator and two major banks.

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IAG, parent of British Airways, said: “We have always been opposed to state aid . . . We would urge and expect the European Commission to take interim measures to suspend this manifestly illegal aid.”

Alitalia declined to comment. But Brussels is now expected to examine Alitalia’s proposed capital increase involving Poste Italiane to assess whether it complies with European Union rules restricting state support to companies.

Italy has yet to approach the commission, even informally, to discuss the Alitalia situation, but Brussels wants Italy to apply for permission for the capital increase before it happens.

Brussels said: “We expect Italian authorities to notify the envisaged measure to the European Commission. Only after receiving the notification will we be able to assess its compatibility with EU state aid rules.”

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.Full FT article (££) at

http://www.ft.com/cms/s/0/bbb37398-356f-11e3-b539-00144feab7de.html#axzz2hbPrPPF2

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Recently:

Consultation on rules for European Commission state aid to airports and airlines

18.9.2013Under the European Commission, state aid is granted to various sectors of the economy. However, a key issue is the impact it has on distorting the market, and giving an unfair advantage to those companies or organisations receiving it. Airports and airlines are one sector that receives large amounts of state aid through the EC. The Commission’s DG Competition is tasked with overseeing state aid. There have been earlier sets of guidelines on state aid to airports and airlines, but there was a recent consultation that ended on 25th September. The exact amount of state aid given to the aviation sector is somewhat shady, but is at least €3 billion, for those subsidies that are fully notified.There have been widely publicised cases, such as that of Ryanair at Charleroi airport. Transport & Environment have produced an easy-to-read briefing on the state aid situation, and people are urged to respond to the consultation. The state aid gives the aviation industry unmerited subsidy, and helps to encourage very high carbon travel.Details at http://www.airportwatch.org.uk/?p=17424

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Background to State air for airports and airlines:

On 3 July 2013 the European Commission published revised draft guidelines on State aid to airports and airlines. The guidelines need to be urgently reconsidered as they risk further distorting competition, wasting scare public resources and expanding billions of euros in climate harmful subsidies.
Transport & Environment (T&E) have produced a short (and easy to read) briefing on state aid for airports and airlines.  It is at State Aid for Airports and Airlines
T&E have written to Commissioner Joaquin Almunia, (who is currently responsible for competition under the second mandate of President Barroso) outlining T&E’s concerns in relation to the draft guidelines. It is at Letter to Commissioner Almunia.
T&E hosted an event, in Brussels, called ‘Citizens, Aviation and Competition: State Aid for Airports and Airlines’ on Monday 16 September.
The current consultation on state aid to airports and airlines closed on 25th September
State aid to various sectors comes under DG Competition in the European Commission. http://ec.europa.eu/competition/state_aid/overview/index_en.html
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