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Alitalia board picks Air France-KLM's 6.5 bn euro rescue plan


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by Gina Doggett Fri Dec 21, 2:22 PM ET


ROME (AFP) - Alitalia's board of directors said Friday it had advised the Italian government to pursue an offer by Air France-KLM to rescue the near-bankrupt airline with a long-term investment of 6.5 billion euros.


In the widely-expected decision, the board said it preferred the rescue plan by Air France, the world's largest airline by revenues, to another proposed by the Italian company Air One.


"The proposal by Air France-KLM is the more opportune and calls for a significant investment plan (of) 6.5 billion euros (9.3 billion dollars) in the long term," Alitalia said in a statement.


The twice-postponed decision, which the statement said was unanimous, was reached after seven hours of discussion by the board of the flag-carrier, which is losing some one million euros a day.


"The business plan presented by Air France-KLM was of great credibility and capable of resolving Alitalia's strategic, industrial and financial crises," the statement said.


Alitalia is beset by high operating costs and fierce competition from budget rivals.


"The Alitalia brand and the Italian identity will remain a basic asset of the company and will be further developed to the benefit of the new group," the board said, adding saying that Air France would make these assurances to the Italian government, which owns a 49.9 percent stake in the ailing airline.


The government will not announce whether it will adopt the board's recommendation until mid-January, reportedly fearing union action over the holiday season.


Italian Prime Minister Romano Prodi, a former European Commission president, had earlier vowed to announce a decision by Christmas.


The unions, fearing fallout from restructuring -- notably sizeable layoffs -- have threatened strike action if they are not kept fully informed of the rescue plan for the airline.


Prodi's wide-ranging centre-left government reportedly remains divided between the two offers, though Prodi himself, as well as his economy and development ministers, are said to lean towards Air France.


Alitalia boss Maurizio Prato also implicitly backed the Air France plan in remarks ahead of the decision.


"Air France-KLM, with a turnover of more than 23 billion euros and a capitalisation of around 7.2 billion euros, is the world's largest airline in terms of receipts and has proven successful experience in industrial integration and restructuring," Alitalia's statement said.


Air France -- which stayed away from a failed attempt to auction Alitalia last July -- has proposed a share swap that would allow Alitalia to have a place in the new entity with full rights.


The European giant is offering 35 euro cents per share along with a recapitalisation of 750 million euros. It would also cut some 1,500 jobs from the Alitalia workforce.


The Air France blueprint does not reveal its plans for the ground services company AZ Servizi, which employs 8,300 people.


For its part, Air One proposed to merge the two Italian carriers to create Europe's fourth largest airline.


Air One, Italy's second largest carrier after Alitalia and a commercial partner of Germany's Lufthansa, would invest a total of 5.3 billion euros by 2012, beginning with an immediate injection of one billion euros, and renew Alitalia's ageing fleet with 130 new planes.


Backed by Italian banking giant Intesa Sanpaolo, Nomura of Japan and the US investment banks Goldman Sachs and Morgan Stanley, Air One has offered one cent per share and would axe 2,750 jobs from Alitalia Fly and 1,050 from AZ Servizi.


The government failed to sell Alitalia by auction last July.


The long-running saga has been fraught with market-moving uncertainty. Alitalia's share price dropped 5.6 percent to 72 cents on Monday, recovering to 76 cents on Friday.


Fonte: Yahoo!

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