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Stricken Alitalia debts totaled $3.3 billion at end of February

Published 05/06/2017, 11:24 AM
© Reuters. FILE PHOTO: An Alitalia plane approaches to land at Fiumicino international airport in Rome
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MILAN (Reuters) - Loss-making airline Alitalia, which asked to be put under special administration on Tuesday, had debts of around 3 billion euros ($3.3 billion) as of the end of February, Italy's government said on Saturday.

In a document marking the opening of the special administration process and the appointment of three commissioners to run the airline, the government said Alitalia had current liabilities of around 2.3 billion euros and assets worth 921 million.

Alitalia, 49 percent owned by Abu Dhabi's Etihad Airways, has filed to be put under special administration for the second time in less than a decade after workers rejected its latest rescue plan.

Rome has ruled out renationalising Alitalia, an airline that was once a symbol of Italy's post-war economic boom but is now struggling to compete at home against low-cost carriers and high speed trains, and has not invested sufficiently in the higher-margin long-haul routes to get back to profit.

The airline's balance sheet will be scrutinized by the three commissioners who have been given six months to assess whether it can be restructured, either as a standalone company or through a partial or total sale, or else liquidated.

One of them, Luigi Gubitosi, has already said that the airline's costs - especially for leasing, fuel and maintenance - were above market rates and will have to be slashed to make Alitalia attractive for any potential buyers.

The Italian government has thrown the airline a short-term lifeline with a bridge loan of 600 million euros to see it through the process.

Sources have said the airline is losing at least a million euros a day and risked running out of cash by the middle of this month without the handout.

Rival airlines including Lufthansa (DE:LHAG) and Norwegian Air (OL:NWC) have shown little interest in buying Alitalia and creditors have refused to lend more money, putting more pressure on the government to find a way to save the flag carrier.

Qatar Airways has been cited by local media as one of the few rivals potentially having any interest in buying Alitalia, but the Gulf carrier declined to comment on the speculation.

© Reuters. FILE PHOTO: An Alitalia plane approaches to land at Fiumicino international airport in Rome

No potential buyer will be willing to take on Alitalia's debts, and may only be interested in a scaled-down version of the airline, which now employs 12,500 staff, or only some individual assets, analysts have said. ($1 = 0.9096 euros)

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