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 Posted: Wed Jan 10, 2007 8:12 pm Post subject: Alitalia Looks To New Turnaround Plan |
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August 31, 2006
Italy's government and Alitalia looked to yet another turnaround plan on Thursday as Air France KLM dampened talk of a rapid merger with the Italian airline until its outlook improved.
Italy's government said Alitalia's chief executive believed a new industrial plan was needed, just two years after he launched a turnaround effort that included cutting jobs and spinning off ground services.
"The government views as positive the comments by the CEO Giancarlo Cimoli about the need for a new industrial plan," the prime minister's office said in a statement. It did not elaborate, nor did it make any reference to Air France KLM.
The airline said late on Wednesday it would announce new measures within a few w s but did not go as far as to say it would present a new plan.
Its old plan had called for Italy's largest airline, which is nearly 50 percent owned by the state, to turn a profit in 2006 after years of losses. Alitalia withdrew that pledge in May, at least temporarily, when it announced a year-on-year widening of its first-quarter operating loss.
Air France KLM dampened talk of a rapid merger with Alitalia on Thursday, just a day ahead of scheduled talks between the French and Italian prime ministers in Rome, which were once seen as a possible milestone towards a deal.
"The conditions have not yet been fully met," Air France KLM Deputy Chief Executive Pierre-Henri Gourgeon told analysts.
"Alitalia should be privatized, and its recovery plan should demonstrate with real figures that recovery is on track," he said, adding that Alitalia's latest results indicated a delay.
Analysts have been speculating on a merger to ensure the long-term survival of Italy's flag carrier, which has seen its share of the domestic market fall to just over half at the end of 2005 from around 80 percent at the end of 1994.
Alitalia is due to post its first-half results on September 12, when it has said it will offer an indication of whether a profit in 2006 will still be possible.
The airline's operating loss widened to EUR128.8 million euros (USD$165.3 million) in the first three months as fuel costs and strikes weighed on results. Revenues also fell just over 3 percent against the same period last year.
Alitalia has blamed its troubles on a series of factors including fuel prices, European deregulation, loss of slots at Milan's Linate Airport, antitrust decisions and even what it said was an inadequate government transport policy.
Italy's government said on Thursday it would move ahead with regulatory reforms to the airline sector agreed last year, which were meant to help Alitalia.
But unions, which are planning a 24-hour strike on September 7, have suggested that management is to blame and have called on the government to replace Cimoli.
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