Air-France-KLM writes off its stake in Alitalia
CEO Colaninno says he will leave airline after capital plan31 October, 19:17
Shareholders in the Air France-KLM group made the decision to write off its investment 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.
Once that plan is complete, Alitalia Chairman Roberto Colaninno announced, he will no longer be a manager at Alitalia, but would remain on the board and retain his large stake in the carrier. "After having supported the recapitalization of Alitalia, at the end of the (relevant) operations...my resignation will be formalized," Colaninno said in a statement. "I will not be available to take up a top position again".
As Alitalia looks for support for its capital injection, Air France-KLM chief executive officer Alexandre de Juniac said his group has been "clear from the beginning" that it could still assist Alitalia - but only under "very strict conditions" including financial restructuring and changes to the airline's medium- and long-haul networks.
"We have always said that we are a serious and loyal partner of Alitalia, which means that we will help Alitalia but (under) very strict conditions," said de Juniac.
Meanwhile, as Alitalia struggles to stay in business, it reported a small net profit in the third quarter of seven million euros, 20 million euros less than what was reported during the same period in 2012, the carrier announced at a board meeting on Thursday.
Earnings before interest and taxes (EBIT) for the quarter was reported as 36 million euros, down from third-quarter results of 50 million euros in 2012.
In the first nine months of this year, Alitalia posted a loss of 162 million before interest and taxes, compared with a loss of 119 million euros in January to September 2012.
The carrier also lowered its net debt to 813 million euros in the third quarter after trimming debt in the previous quarter ending June 30 to 851 million euros.
The carrier also 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 report 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 that could total 75 million euro.
Lufthansa Chief Executive Officer Christoph Franz also slammed the planned capital increase on Thursday, saying that while there were legal ways of helping carriers facing difficulties, limits existed in relation to repeated State aid.
Franz made the comments during a conference call for analysts, in which he also added that repeated actions of State aid distort the level of the playing field. He said his company had repeatedly asked the European Union to apply the policy guidelines on this matter.