Air France-KLM write off investment in troubled Alitalia
Italian carrier denies reports won't operate all flights31 October, 12:04
Shareholders in the Air France-KLM group made the decision based on Alitalia's need for a 300-million-euro capital injection, which will dilute the value of existing shares. "Given the uncertainty of the situation of Alitalia, Air France-KLM group has decided to fully depreciate the value of the shares held," the group said in a statement attached to quarterly financial results.
In those results, the Air France-KLM group included a third-quarter impairment charge of 119 million euros to reflect the write-off.
Earlier this month Alitalia shareholders approved an emergency 300-million-euro capital hike to pull the airline from the brink of bankruptcy.
The State-owned post office, Poste Italiane, pledged to buy up to 75 million euros in any unsubscribed shares in the capital increase. Italian banks Intesa Sanpaolo and Unicredit also said they would take a stake worth up to 100 million euros.
The capital boost is part of a government-engineered 500-million-euro rescue package, which also includes 200 million euros in loans.
Separately, Alitalia on Thursday denied reports suggesting that it would not be able to operate its flights, stating that its operations would be continuing without disruption. Newspaper Il Fatto Quotidiano reported Thursday that Alitalia is "in danger of collapse" and therefore airline tickets "are not guaranteed".
In a statement, Alitalia denied that and said it "confirms the continuity of its flights". The recent Alitalia rescue package has prompted International Airlines Group, parent company of British Airways and Iberia, to urge the European Commission to intervene to suspend what it said was "flagrant State aid" - a charge the Italian government has denied.
The EC has asked for more information about the Alitalia aid package - particularly the involvement of Italy's post office.
On Wednesday, a French business newspaper reported that the likelihood of Air France-KLM group contributing to a 300-million-euro capital injection for troubled Alitalia was "almost nil".
But, the report added, if the Italian carrier were to run into another liquidity crisis next February or March, the Air France-KLM group could consider offering assistance.