Alitalia needs $1.1 billion cash to maintain operating levels

01 Feb 2008

1

The Alitalia (AZ) board at its meeting this week, held to approve the 2008 budget, said it would look to raise about €750 million ($1.1 billion) over the next five months in order to maintain its cash in hand "at adequate operating levels." The badly struggling airline is now battling speculation that the fall of prime minister Romano Prodi's government will also impact its proposed merger with Air France-KLM.

AZ said its cash in hand dropped 7.1% from the end of November to €367 million.

Alitalia is still battling a rival bid from Air One, which is seeking to acquire the government's 49.9% stake in AZ. According to media reports, Air One has filed a lawsuit in a regional court challenging the government's decision to negotiate exclusively with AF-KLM.

Prodi had backed the AF KLM bid, but his departure now and the possibility of new elections may affect the sale.

Industry analysts point out that if the Prodi government goes to elections, the AF-KLM bid will proceed without any hiccups. But, in case a new Government steps in as a replacement, the whole bidding process would then be re-opened for discussions.

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