Italy OKs euro1 billion-plus offer for Alitalia

By: AP
By: AP

ROME (AP) -- The Italian government has approved an offer from a group of investors to buy the assets of the bankrupt Alitalia airline after getting them to raise the bid to at least euro1.052 billion ($1.33 billion).

The approval, announced Wednesday by the Economic Development Ministry, clears the way for Alitalia's administrator Augusto Fantozzi to sign a final deal with CAI Compagnia Aerea Italiana (Italian Air Company).

The new airline is to launch by early December - two years after the government started the long and difficult process of unloading its 49.9 percent stake in long-troubled Alitalia.

Economic Development Minister Claudio Scajola said in a statement that an oversight committee asked CAI to raise its original euro1 billion ($1.26 billion) bid by euro52 million based on the findings of adviser Banca Leonardo, which audited the assets CAI will take over. The bank put their market value at euro1.051 billion.

The investors have not revealed the structure of the deal, but Alitalia has said CAI will take on more than euro625 million euros of Alitalia's debt, while the rest will be paid in cash.

The Italian investors, led by scooter-maker Piaggio chairman Roberto Colaninno, have offered to take over the company's profitable assets, including some of Alitalia's planes and slots. They plan to cut routes and streamline the new Alitalia and merge it with the much smaller Air One, Italy's No.2 carrier.

Colaninno expressed "great satisfaction" with the deal and said in a statement he was looking forward "with confidence to the launch of the new company, without underestimating the open problems that are still awaiting a solution."

Government approval was one of the final steps in completing the deal after the European Union gave its go-ahead last week.

In another move, contracts went out this week to 12,600 workers of the new Alitalia even as the airline has canceled more than 100 flights a day due to wildcat strikes by some unions opposed to the deal.

Alitalia has about 20,000 employees while Air One has 3,500.

Some 3,250 workers who will lose their jobs in the deal are to receive 80 percent pay for up to 8 years under a generous government scheme. Other jobs are expected to be preserved through the sale of additional assets. No deals have yet been announced although Fantozzi says he's had many offers.

CAI is also seeking a foreign investor to become a minority shareholder, but company officials have said that decision could wait until after the new airline was launched. They have been meeting with both French-Dutch carrier Air France-KLM and Germany's Lufthansa.

Italian Premier Silvio Berlusconi leaned toward Lufthansa during a summit Tuesday with German Chancellor Angela Merkel in the northeastern city of Trieste, but said the decision was up to CAI.

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AP Business Writer Colleen Barry contributed to this report from Milan, Italy.

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