Oct. 15 (Bloomberg) -- The head of Italy’s postal service, which is helping bankroll an Alitalia SpA rescue, will meet his counterpart at Air France-KLM Group to sway the Italian carrier’s biggest investor to buy into a capital increase.
Poste Italiane SpA Chief Executive Officer Massimo Sarmi will discuss a new Alitalia business plan with Alexandre De Juniac at Air France-KLM this afternoon in Paris, Alitalia said today after a board meeting that ran into the night. Alitalia shareholders unanimously approved a 300 million-euro ($477 million) capital increase as part of a 500 million-euro bailout.
While Air France-KLM, which holds a 25 percent stake, backed the plan, the carrier is reluctant to participate, three people close to the talks said. The Franco-Dutch company has shown little appetite to commit fresh funds to an Alitalia rescue while itself undergoing a revamp that includes thousands of job cuts and a smaller
“Air France-KLM can ill afford to inject substantial cash into the struggling Italian business and is certainly in no position to have management distractions,” said Andrew Lobbenberg, a London-based analyst at HSBC Bank Plc.
Air France-KLM rose as much as 11 cents, or 1.4 percent, to 7.54 euros and traded at 7.4 euros as of 10:34 a.m. in Paris. The stock has gained 5.9 percent this year. The company had no comment on its involvement in the Alitalia rescue, a spokesman said yesterday.
Investors have a month from Oct. 16 to decide whether to buy new stock. In light of a possible change in the shareholder structure after the capital injection, “board members offered irrevocable resignations” effective at an investors meeting scheduled shortly after the capital increase, the company said.
New shares of the airline, which is losing more than 1.5 million euros a day, will be offered to existing shareholders. Air France-KLM would see its 25 percent stake in Alitalia drop to about 11 percent if it doesn’t buy into the capital increase.
The Alitalia rescue has also encountered opposition in Europe, with British Airways-parent International Consolidated Airlines Group SA saying the European Commission should block the investment by the Italian state-owned postal service.
“We would urge and expect the EU Commission to take interim measures to suspend this manifestly illegal aid,” IAG said in a statement yesterday. “It’s protectionist, undermines competition and favors failing airlines that have not got to grips with economic reality.”
Antoine Colombani, spokesman for Competition Commissioner Joaquin Almunia, said the panel can assess the measures only once they have been submitted by the Italian authorities.
The intervention of the government to rescue the airline for the second time in five years comes as Italy, the euro region’s third-largest economy, struggles to emerge from the worst economic slump since World War II and at the same time meet the European Union budget-deficit target of 3 percent. Alitalia’s resources have been depleted by mounting losses and competition from low-cost carriers including EasyJet Plc.
Poste Italiane agreed to contribute 75 million euros for Alitalia, while the country’s two biggest banks -- UniCredit SpA and Intesa Sanpaolo SpA -- will guarantee as much as 100 million euros for eventual unopted rights in the capital increase. They will also provide a 100 million-euro bridge-to-equity loan, according to a statement Oct. 11.
Alitalia, which employs about 14,000 people, has been on the brink of collapse before. The airline was put into bankruptcy in 2008 after political and labor opposition thwarted attempts to sell the company, which was almost 50 percent state- owned at the time. Former Premier Silvio Berlusconi campaigned then to keep the airline Italian after Air France withdrew its acquisition offer.
--With assistance from Gaspard Sebag in Brussels, Robert Wall in London and Andrea Rothman in Toulouse. Editor: Benedikt Kammel