Italian airline could need another cash injection if targets not reached, says CEO
Troubled Italian airline Alitalia will ask banks for additional funding and could be forced to launch another share issue if the business does not perform as planned, its chief executive said on Monday.
The loss-making airline is struggling to keep flying and raised €300m ($410m) in an emergency capital increase last month having agreed €200m in bank financing in October.
"If the business plan targets are not reached another cash call will be inevitable," Gabriele Del Torchio told a shareholders meeting which re-elected him as chief executive and Roberto Colaninno as chairman.
Earlier in January newspaper Il Messaggero said Alitalia had asked banks to extend existing loan agreements by €50m.
Italy's biggest retail bank Intesa Sanpaolo is Alitalia's leading shareholder with a 20.6 percent stake while UniCredit is its third-largest investor with 13 percent.
Air France-KLM was Alitalia's biggest shareholder with 25 percent but its stake fell to around 7 percent after the Franco-Dutch group snubbed Alitalia's recent rights share offer.
Alitalia needs money to invest in more lucrative long-haul routes after a focus on domestic and regional flights failed to pay dividends due to competition from budget carriers and high-speed trains.
Talks are under way with Etihad to bring the fast-expanding Abu Dhabi-based airline on board, with sources close to the matter having said Etihad is willing to take a stake of up to 40 percent.
However, Etihad said earlier on Monday it would not be rushed into making a decision over an investment.
Del Torchio said the talks with Etihad were in an exploratory phase, but added he was "optimistic".
Alitalia's CEO, who said the new board would remain in place until 2014 results were approved, also told shareholders Air France-KLM was still interested in an cooperation deal.
On Monday, Etihad chief executive James Hogan said the Abu Dhabi airline will not be rushed into making a decision over an investment in the Italian airline.
"There are no plans to make any announcement at the end of this month," Hogan told journalists at an event with Air Berlin in the German capital.
An Italian newspaper reported last week that Etihad could present an offer as early as this week.
"What is important in any transaction is that you undertake your due diligence and ensure if you are going to invest, there is a clear plan to move to profitability. We will not be rushed into making a decision," Hogan said.
After buying a 29 percent stake in Air Berlin, Germany's second-largest airline, in 2011, Etihad has taken stakes in airlines across the world and Hogan said Etihad would continue this strategy.
"Global reach is beyond the capacity of any single airline," Hogan said.
Along with Air Berlin, Etihad also owns stakes in Air Serbia, Aer Lingus, Darwin Airlines, Virgin Australia, Jet Airways and Air Seychelles.
Hogan said, though, that Etihad was not looking at investing in Poland's LOT or Latvia's Air Baltic, as recently suggested by analysts. Nor was Etihad planning to take a stake in Rome's Fiumicino airport, he added.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.