Friday 23 February 2018

Ryanair 'might consider capital funding rescue' for Alitalia

Ryanair's CEO Michael O'Leary
Ryanair's CEO Michael O'Leary

Alberto Sisto Rome

Ryanair has not offered to take part in Italian airline Alitalia's poorly received €300m capital increase but would consider investing, if asked.

Alitalia has been left with the prospect of running out of fuel before next summer unless it can get top shareholder Air France-KLM or some other investor to invest and help revamp its fleet, after a lukewarm response to its emergency cash call.

Speaking at a news conference in Rome, Ryanair's Michael O'Leary said that if his airline were asked to join Alitalia's cash call currently earmarked only for shareholders, "we would evaluate" the possibility.

REBUFFED

But the chance of Alitalia letting Ryanair invest in its capital are slim after the carrier last week rebuffed an offer from Ryanair to feed passengers into its long-haul routes and help boost Alitalia's profitability.

Alitalia then said it had its own restructuring plan in place and suggested the two firms were not natural partners.

Cash-strapped Alitalia has so far raised less than two-thirds of the capital wanted from the share sale and will rely on Italy's state-owned postal service and other investors to come up with the rest.

Even with a successful cash call, analysts said the airline, which loses around €700,000 a day and has net debt of more than €800m, may have to ground its fleet within six months unless a strong investor can be found.

Mr O'Leary said Alitalia could be restructured, but the airline was suffering from too much political meddling, too many strikes and an inadequate fleet.

Today's Alitalia is much leaner than the group that was rescued and privatised in 2008, but a focus on the domestic and regional markets has left the airline vulnerable to competition from low-cost carriers and high-speed trains.

Last month, Alitalia's board approved a revised business plan, promising deep cuts to make the airline more competitive.

Alitalia and Italy's government have been hoping that a strong airline such as Lufthansa, Etihad Airways or Russia's Aeroflot would come to its rescue, but all three have said they were not interested in Alitalia right now.

Air France-KLM, already a shareholder with 25pc, also walked away from the rights offer, asking for much more radical restructuring of Alitalia's debt before it could help.

Irish Independent

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