Preliminary negotiations between the management of the Italian company and the German carrier to involve it in a recapitalization of up to €400m. Alitalia’s new route to becoming a high flyer once again could be drawn by the end of the year by taking on board one of the world’s biggest carriers, Lufthansa, which has expressed interest several times in the past eight years.
According to the reconstruction by Il Messaggero, the meeting should focus on the plans for the airline’s relaunch, on which work is ongoing as a result of the company’s precarious health. A way out might be identified in the dialogue
under way between Alitalia CEO Cramer Ball and CFO Duncan Naysmith and the management of the German company based in Cologne, under the direction of James Hogan. “It will be the sexiest company in Europe,” Hogan said in August 2014 at the presentation of the agreement which entailed burdens for the Italian partners in terms of investments for €1.7bn, of which €995m in bank refinancing. Now the head of Etihad attributes responsibility to commitments not honoured by the Italian government on Linate airport and the development of tourism.
Last June Alitalia was to have accumulated a loss of over €100m. In the second semester, less propitious than the first from the commercial standpoint, a worse performance is expected which could lead to a loss of more than €300m in 2016. This deficit would erode the company’s assets, making a shoring-up operation, possibly in equity, inevitable since other solutions present drawbacks.
There is no intention on the part of the Italian partners to dig deeper into their pockets, however. CAI’s shareholders are headed by banks: Intesa Sanpaolo is the largest with 20.59%, followed by Unicredit with 12.99%. Tomorrow’s board meeting should ratify the designation of Gaetano Micciche, president of Banca Imi, in place of Paolo Andrea Colombo, and of Federico Ghizzoni in place of Jean-Pierre Mustier. The change will bring two highly experienced bankers who can devote more time to the grand manoeuvres for the relaunch of Alitalia, which suffers in particular from the competition of the low-cost carrier Ryanair, which carried 101 million passengers in 2015 compared to Alitalia’s 22 million.
Although the corporate agreements between CAI and Etihad provide for a five-year lock-up for the Italian shareholders, there are intermediate windows to enable departures before the time limit. There is also a constraint on the CAI partners not to involve another airline in the capital so as not to open the doors to a competitor. Now, though, it is Etihad itself that has established these contacts with the Germans. Even if the plan must still be defined, in broad outline Alitalia could launch a capital increase on the order of €400-500m to which CAI would not adhere by specific desire, thus diluting its share to one of clear minority status (10-15%). The Arabs would participate in the operation for a 45% share, and Lufthansa could take on up to 45%.
It should be remembered that Etihad cannot take control of a European carrier because it is not an EC carrier, unlike the Germans, who are making their appearance in Italy for at least the third time. The first was in the spring of 2008, on the eve of the installation of the Berlusconi government: Gianni Letta consulted the German ambassador, who showed interest in Alitalia but only to acquire what was left after bankruptcy while still ensuring the services and routes flown by the company. The second was in the autumn of the same year on the eve of the takeoff, when the former CEO Rocca Sabelli was in search of an industrial partner. In addition to Air France, he also contacted Lufthansa. He flew specially to Frankfurt but was dumbfounded to learn from his interlocutor that there was interest only in a commercial agreement, while the French were anteing up €315m.