ALITALIA POSTS PROFIT BUT AIR FRANCE KLM ALITALIA SUPER AIRLINE IS PREFERRED OPTION FOR CEO

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By TESTCustomwebLP TESTCustomwebLP November 3, 2010 14:24

ALITALIA POSTS PROFIT BUT AIR FRANCE KLM ALITALIA SUPER AIRLINE IS PREFERRED OPTION FOR CEO

Alitalia posted a €39 million ($54.4 million) net profit for the third quarter from a €1 million profit for the same period last year. The airline carried 7.1 million passengers during Q3, up 11% on the same period last year. The load factor was up 1.7% on last year to 76%. EBIT increased from €15 million to €56 million and revenue increased 15% to €971 million.

Running figures for the three quarters shows Alitalia remaining in the red with a €125 million deficit up from a €323 million deficit for the same period last year. Alitalia stated that year-end results are forecast to be better than expected.

In 2008 the centre-left government of Romano Prodi had selected Air France KLM as the best candidate to buy from the State the controlling stake in the Italian flag carrier. But Silvio Berlusconi’s promise to keep Alitalia in Italian private ownership helped him win the 2008 general election and thus shelved the idea. Now though Alitalia Chief Executive Rocco Sabelli intends to recommend a merger with Air France KLM according to extracts from a book to be published this week.

“My personal opinion, which I will transform into a recommendation to shareholders, is to construct a merger between the two companies to create a larger combination,” said CEO Rocco Sabelli, according to extracts from the book by prominent Italian journalist Bruno Vespa. Sabelli said the Italian shareholders of Alitalia could aim to become the new group’s second main shareholder after the French government “in order to keep the Italian ownership at a relevant role”.

There was no immediate comment from Air France-KLM but Alitalia chairman Roberto Colannino dismissed Sabelli’s idea of a merger with the French group. “It may be a thought of Sabelli’s, but it’s not shared by shareholders,” Colaninno told reporters.

Air France KLM still to this day has a 25% stake in Alitalia and has advised the airline on many aspects of reform over the past two years. It is unthinkable that Alitalia will be sold to Air France KLM while Silvio Berlusconi is Prime Minister. It was after all he who cobbled together a group of Italian investors to save the airline from a foreign takeover in 2008. when he successfully used the plight of the flag carrier to leverage against in his run for office, when he said that the carrier must remain Italian.

Silvio, no matter how much anti ageing treatment takes place, will not be around forever, and with Alitalia’s investors committed not to sell their stakes until 2013 it seems likely that at best we are slowly moving towards Alitalia becoming part of Air France KLM within the next three years. Only further cashflow problems at Alitalia can speed the process. By then though British Airways might well be back in the frame. Expect the whole Alitalia saga to come full circle by 2013, hopefully by then without the red ink. Due to the financial crisis and EU regulations the Italian state is in no position to flow money toward the airline at any point so for now Alitalia stands on its own merit.

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By TESTCustomwebLP TESTCustomwebLP November 3, 2010 14:24
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