Maxiumus
11th Jun 2004, 19:57
Looks like more trouble brewing south of the Alps.
Alitalia warns of liquidation risk
By Tony Barber in Rome
Published: June 11 2004 11:23 | Last Updated: June 11 2004 20:10
The spectre of liquidation returned to haunt Alitalia on Friday after the struggling Italian airline joined Deloitte, its auditor, in warning that urgent rescue measures were necessary for its survival.
Alitalia made public its assessment after Deloitte said it was unable to approve the airline's 2003 results because of significant uncertainties over how Alitalia intended to return to financial health.
Italy's centre-right government is determined that Alitalia, a symbol of national pride for decades, should not suffer the fate of Sabena and Swissair, the Belgian and Swiss airlines that collapsed in 2001. But last month the government, which owns 62 per cent of the airline, effectively postponed a decision on how to refinance and reorganise Alitalia until after this weekend's European and local Italian elections.
Alitalia, implicitly blaming some of its troubles on the government and restive trade unions, said: "The company can still aspire to return to a durable position in which it is competitive and offers value to shareholders, provided that indecision and conflicts are overcome. For too long, these have blocked the company from undertaking . . . the steps to recovery that cannot be postponed."
Deloitte first indicated that it would not be able to approve Alitalia's accounts on May 20, when the airline reported a net loss of €520m ($624.4m) in 2003.
In the first quarter of this year, Alitalia had a pre-tax loss before one-off items of €206m.
"As in the past, the company in 2003 sustained substantial operating losses and its financial situation grew worse," Deloitte said. "This negative trend continued in the first months of 2004 and, in the absence of incisive and adequate measures, could force . . . other solutions, even ones related to liquidation."
Alitalia echoed the auditors by saying some form of liquidation was a risk unless it received an emergency bridging loan to accompany a restructuring plan.
The government installed new management at Alitalia in early May to draw up a recovery plan after labour unrest and political quarrels prompted the departure of two chief executives in rapid succession. Giancarlo Cimoli, the new chief executive, met trade union officials last week and told them Alitalia was in "a critical situation". Alitalia's crisis has deepened with the arrival of low-cost airlines in Italy's domestic market in the 1990s. Alitalia's domestic market share is about 50 per cent, the lowest of any European national airline.
Alitalia warns of liquidation risk
By Tony Barber in Rome
Published: June 11 2004 11:23 | Last Updated: June 11 2004 20:10
The spectre of liquidation returned to haunt Alitalia on Friday after the struggling Italian airline joined Deloitte, its auditor, in warning that urgent rescue measures were necessary for its survival.
Alitalia made public its assessment after Deloitte said it was unable to approve the airline's 2003 results because of significant uncertainties over how Alitalia intended to return to financial health.
Italy's centre-right government is determined that Alitalia, a symbol of national pride for decades, should not suffer the fate of Sabena and Swissair, the Belgian and Swiss airlines that collapsed in 2001. But last month the government, which owns 62 per cent of the airline, effectively postponed a decision on how to refinance and reorganise Alitalia until after this weekend's European and local Italian elections.
Alitalia, implicitly blaming some of its troubles on the government and restive trade unions, said: "The company can still aspire to return to a durable position in which it is competitive and offers value to shareholders, provided that indecision and conflicts are overcome. For too long, these have blocked the company from undertaking . . . the steps to recovery that cannot be postponed."
Deloitte first indicated that it would not be able to approve Alitalia's accounts on May 20, when the airline reported a net loss of €520m ($624.4m) in 2003.
In the first quarter of this year, Alitalia had a pre-tax loss before one-off items of €206m.
"As in the past, the company in 2003 sustained substantial operating losses and its financial situation grew worse," Deloitte said. "This negative trend continued in the first months of 2004 and, in the absence of incisive and adequate measures, could force . . . other solutions, even ones related to liquidation."
Alitalia echoed the auditors by saying some form of liquidation was a risk unless it received an emergency bridging loan to accompany a restructuring plan.
The government installed new management at Alitalia in early May to draw up a recovery plan after labour unrest and political quarrels prompted the departure of two chief executives in rapid succession. Giancarlo Cimoli, the new chief executive, met trade union officials last week and told them Alitalia was in "a critical situation". Alitalia's crisis has deepened with the arrival of low-cost airlines in Italy's domestic market in the 1990s. Alitalia's domestic market share is about 50 per cent, the lowest of any European national airline.