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Italian government in new push to sell off Alitalia

30 May 2008, 18:11 CET

(ROME) - The Italian government said Friday it was launching a new push to sell the ailing Alitalia, acknowledging that the national airline was in a "critical" state.

The cabinet of new right-wing Prime Minister Silvio Berlusconi agreed to redouble efforts to privatise the airline, Economy Minister Giulio Tremonti said, adding that the Alitalia board would meet on Tuesday.

The future of the airline has been in doubt since Air France-KLM dropped a plan to buy Alitalia earlier this year, with Berlusconi, elected in April, promising an Italian solution to its problems.

The government has a 49.9 percent stake in the airline, which is losing more than two million euros (3.1 million dollars) a day.

Intesa Sanpaolo bank will advise Alitalia on the sale, Tremonti said.

"The role (for Intesa Sanpaolo) is that of a consultant to find a solution and, possibly, to help it carry it out," he said.

Asked about a timetable for a sale, Tremonti said: "The sooner, the better."

Also Friday, Rome met a European Union deadline for clarifying an earlier decision to grant Alitalia an emergency loan of 300 million euros to keep it afloat until its future is decided.

The EU's executive arm said it "will now analyse the contents of this response."

The commission, which checks state aid in Europe to ensure it does not distort competition, refused to comment further on the case pending its analysis.

On Thursday, the Italian government said the loan would throw the national carrier a 12-month lifeline.

Brussels has raised doubts about the loan, saying that Alitalia was not entitled to more state aid since it had been bailed out previously.

The EU is also likely to take a dim view of a decree turning the money into Alitalia's own capital.

Earlier this month, Alitalia said its asset base had deteriorated seriously because of a sharp depreciation in the value of its aircraft and that its net assets amounted to only 96 million euros at the end of March.

Alitalia's fate became a prominent issue in the campaign ahead of mid-April elections, when Berlusconi said he would reject an Air France-KLM takeover and spearhead an all-Italian rescue.

Aeroflot, had also been mentioned as a suitor, but the Russian airline's chairman, Valeri Olukov, said he doubted that Alitalia could be saved, Russian news agencies reported.

"A year ago it was still possible to save it. Now we suspect this stage has passed, Olukov was quoted as saying in Moscow.

Italian opposition leader Walter Veltroni said Thursday he was "setting off the highest possible alarm" and called on the government to quickly provide parliament with "exhaustive information" on Alitalia's prospects.

"Where is this consortium?" he asked, showing newspaper clippings of Berlusconi's repeated assurances in the run-up to the April polls and since.

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.




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