Published: Thu, May 04, 2017
Economy | By Melissa Porter

Alitalia board decides to ask for special administration

Alitalia board decides to ask for special administration

Its employees have already voted against a plan to cut jobs and salaries, which would have allowed Alitalia to secure new funds.

Among airlines able to buy all of Alitalia, Air France-KLM Group purchased a 25 percent stake for 323 million euros in 2009, before becoming disillusioned by continuing losses and declining to take part in a capital increase in 2013.

Shareholders in Alitalia voted unanimously Tuesday to put the company into administration, moving the troubled airline a step closer to liquidation as efforts continue to find a buyer.

"We have done all we could to support Alitalia, as a minority shareholder, but it is clear this business requires fundamental and far-reaching restructuring to survive and grow in future", Hogan said.

The company said its flight schedule would continue to operate as planned, while administrators examine whether the firm can be turned around.

However, without further financial support it may be permanently grounded.

In the medium term, some analysts say low-priced carriers such as Ryanair, EasyJet, and Vueling in Italy - which were among the causes of Italia's troubles - stand to benefit. "The strategy initially developed by Alitalia at the time of Etihad's investment and implemented from 2015 onwards led to significant improvements". Its struggle to make Alitalia pay may be particularly off-putting for carriers subject to the 49 percent cap on ownership of European Union airlines by investors based outside the bloc.

The company said that the 2 billion-euro refinancing plan rejected involved 1,600 job losses, and after that, it had no option to stay solvent.

During a cabinet meeting convened in the evening, the Italian government approved the start of special administration approved a €600 million (US$655 million) bridge loan that will last for six months.

When the Italian airline Alitalia went bankrupt in 2008, the government swooped in with taxpayer money and Pope Benedict XVI - a regular flyer - offered the carrier a blessing.

Etihad said new marketplace challenges, including more competition as well as the impact of increased terrorism threats on tourism, meant "further, deeper change was required".

Under the airline's latest business plan, staff numbers were to be cut by about two thousand and costs reduced by €1 billion ($1.09 billion).

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