French airline Air France revealed its bid, long in the waiting for the state-held stake in ailing Alitalia, and is looking a likely winner, with only a smaller contender, Italian Air One remaining in the race.
A long-awaited offer by Air France-KLM for struggling carrier Alitalia was finally presented on Thursday, with tiny Italian Air One as the only rival one remaining. Lufthansa walked away from the deal at the last minute, after reports of management disagreement, saying the decision was taken for its implied economic risks.
Shares in Alitalia jumped more than 6% in early trading after Air France-KLM said it was sending a non-binding letter of interest to the company’s board. The panel is to meet at 1700 GMT to weigh the offers.
Air One, the only name left from the previous attempt to auction Alitalia, said it would also bid before Thursday’s deadline to sell the state’s 49.9% stake. It is backed by bank Intesa Sanpaolo. Lufthansa said the offer on loss-making Alitalia could have put investment-grade debt rating at risk.
Air France-KLM has emphasized it won’t do a deal that would dent its own profitability. Air France-KLM said in a statement it would aim to develop a business plan in line with that drawn up by Alitalia Chairman Maurizio Prato. It said it would be „counting on the support of the Italian carrier’s entire workforce.” The airline added that the „major step in European consolidation would not only be beneficial for passengers but would also meet the requirements for the group’s economic and financial stability, including its target of a return on capital employed” of 8.5% by the end of the fiscal 2009/2010. However, Air France did not comment on possible requirements it had set for the Italian carrier and its main stakeholder, the Italian Treasury, to buy the strike-prone carrier. Alitalia has a market value of about €1.1 billion ($1.62 billion) and about €1.2 billion of debt. It loses more than €1 million a day.
Prime Minister Romano Prodi’s fragile centre-left government has to find a private solution since the European Union has refused to allow any more state aid to the airline. The offer from Air One would keep the flagship in Italian control. (easybourse)