Alitalia Bankruptcy Risk If No Capital Injection

Alitalia risks having to file for bankruptcy if no deal on a proposed capital increase is reached in a couple of weeks, a government source said on Tuesday.

Alitalia’s shareholders will vote on a capital increase of at least EUR€100 million (USD$136 million) on October 14 to help keep the company afloat.

“Alitalia risks filing for bankruptcy if no solution on the capital increase is found in a couple of weeks,” the government source told Reuters news agency.

Alitalia needs around EUR€500 million to keep going and to be able to invest in a new turnaround strategy, analysts have said, after accumulating losses of over EUR€1 billion since being privatized in 2009.

Air France-KLM owns a 25 percent stake in the carrier.

(Reuters)

Alitalia Hires Bankers To Tackle Cash Crisis

Struggling Italian airline Alitalia has hired boutique investment bank Leonardo to help tackle a liquidity crisis that may see it running out of cash before year’s end.

The move is aimed at finding ways to raise more than EUR€400 million (USD$527 million) to keep the loss-making carrier afloat, a source familiar with the situation said.

Alitalia has struggled to make a profit throughout its life and has been bailed out repeatedly by the Italian state.

It agreed salary cuts with unions in June and its chief executive and board members reduced their pay by 20 percent ahead of the drawing up of a new strategic plan.

The airline, which quadrupled its net loss to EUR€280 million in 2012 compared with the year before, said in July it needed EUR€300 million this year to keep running but expected to break even by 2015.

The airline, which is 25 percent owned by Air France-KLM, was rescued from bankruptcy in 2008 and bought by a consortium of Italian companies including bank Intesa Sanpaolo, road operator Atlantia and holding company IMMSI, the owner of scooter-maker Piaggio.

The investors might sell out after the expiry in mid-October of a lock-up period, paving the way for new shareholders.

Alitalia said in a statement it had hired the bankers to “assist the company in its relationships with the banks.”

Italian newspapers said last month Alitalia was in talks with Etihad Airways on a commercial deal that might lead to the Abu Dhabi carrier taking a stake.

Alitalia and Etihad were also mentioned in the context of a possible tie-up earlier this year, but Etihad said at the time there were no talks between the two firms beyond those on code sharing.

Etihad was not available for comment but a source at Etihad said that, with a stake in Air Berlin and a commercial partnership with Air France-KLM, Etihad was not keen on another investment in a European carrier.

Alitalia earlier this year hired turnaround specialist Gabriele del Torchio to lead it back to profit.

The airline has pushed back to the end of September the approval of its mid-year financial statement, that was due to be approved by the board, mainly to address a tax dispute.

(Reuters)

New low-cost train service launched in France

The French national rail operator SNCF is offering a new low-cost long-distance service to passengers, in a bid to compete with budget airlines and cars. Tickets went on sale this week for Ouigo, a train service with numerous similarities to no-frills carriers such as Ryanair and easyJet.

Trains depart from Marne-la-Vallée to the east of the French capital – almost 20 miles away from central Paris, a scenario reminiscent of the budget airlines’ strategy to use airports away from city centres.

Services will connect Paris to Lyon, Marseille and Montpellier on the south coast, with tickets starting from €10, significantly cheaper than tickets for the normal TGV train.

There will be no compromise on speed, with the new service using the same trains as the TGV. The journey from Paris to Marseille will take three hours and 15 minutes.
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As with the budget airlines, space will be tighter – there will be no first class section, nor will there be any café or bar. There will be room for around 20 per cent more passengers than on a regular TGV service.

Guillaume Pepy, the director of the SNCF, says the new rail service is mostly aimed at people living on the outskirts of Paris, who are more likely to take their car on long journeys.

However it may also be considered by British visitors on a budget. Passengers on Ouigo will, however, need to factor in other additional costs – as well as the journey from central Paris, there is a €5 charge for a second piece of luggage, use of a power point costs €2, and transporting a pet costs €30.

After the €10 starting price – for which there will be 400,000 tickets available – tickets rise to €25 and reach a maximum of €85, depending on the demand.

According to calculations published in Le Figaro, the average price for a Friday journey from Paris to Marseille booked three months in advance costs €72 on the TGV, €50 on Air France, €34.23 on Ryanair, and €25 on the Ouigo.

Three or four return journeys will operate every day, with the first services beginning on April 2.