Troubled Alitalia rescue plan uncertain

Italian bank Intesa Sanpaulo, the institution appointed by the Italian government as an advisor to assist in the rescue of financially-troubled Alitalia, is hoping to present proposals by the end of July. The Italian flagship carrier’s losses hit the 500 million euros level for 2007.

Alitalia recorded an operating loss in 2007 of Euro310 million and has calculated the cost of its loss of reputation at an additional Euro150 million. Airline chairman Aristide Police commented last week that the airline was facing its last chance for survival. He is the carrier’s fourth chairman is the past two years.

The Italian airline has not shown a profit since 2002, and in April of this year, its debts reached Euro1.36 billion. The carrier is still half-owned by the Italian government, as talks concerning privatisation drag on.

In April Air France KLM pulled out of its takeover bid, after it failed to win union support on projected job losses. Incoming Silvio Berlusconi had opposed the takeover, insisting that it was essential for Alitalia to remain under Italian ownership.

The Italian banking advisor is reviewing financial records as it prepares a new rescue plan for the carrier - that is likely to see the break-up of the airline. Smaller Italian airline, Air One, is likely to be allowed to take over Alitalia’s profitable operations.