British Airways Plc and Deutsche Lufthansa AG said they're monitoring Italy’s plans to seek a foreign investor for bankrupt Alitalia SpA, indicating Air France-KLM Group may face a challenge should it bid for a stake.
Lufthansa, Europe's second-biggest airline, said the Italian market is “interesting”, while British Airways, the No. 3, said “people are aware of the situation and are in touch”. Neither would specify if an offer for the Rome-based company is likely.
Italian Prime Minister Silvio Berlusconi said Aug 28 that a foreign partner will be able to take a minority holding once Alitalia is sold to Italian investors, with unprofitable parts of the company liquidated and as many as 7,000 workers fired. Air France said the same day it wants to remain an ally and is willing to take a stake should the carrier show it has better prospects.
Alitalia will be merged with domestic rival Air One SpA as part of the rescue, leaving the new company with two-thirds of the Italian air-travel market and making it more attractive as larger European carriers scramble to consolidate amid declining traffic and higher fuel bills. Lufthansa said Aug. 25 it may also seek a stake in Austrian Airlines, while British Airways said today it too is watching the Vienna-based company.
Lufthansa spokeswoman Claudia Lange said that the Cologne- based company failed to bid for Alitalia last year because of the Italian airline's debt.
Iberia, American Airlines: British Airways spokeswoman Anna McDermid declined to comment further on Alitalia. The London-based airline said July 29 it's planning to merge with Spain's Iberia Lineas Aereas de Espana SA. The pair are also seeking to create an alliance with AMR Corp's American Airlines which would see the companies operate as a single carrier on trans-Atlantic routes.
Air France, Europe's largest airline and a partner of Alitalia in the SkyTeam alliance, dropped an offer to purchase the entire company in April after opposition from unions and Berlusconi during his successful election campaign.
Oddo Securities analyst Yan Derocles said British Airways is less likely to come up with the investment needed to secure a minority stake in Alitalia, which he estimates at about ¤200 million ($293 million).
“It'll be Air France or Lufthansa, but it's by no means clear which,” Derocles said. “Air France already has a commercial alliance with Alitalia, they're both partners in Skyteam, and Air France had already made an offer. On the other hand, Lufthansa is a partner of Air One.” The Paris-based analyst has “add” recommendations on Air France and Lufthansa and a “reduce” rating on British Airways.
The Italian Cabinet on Aug. 28 modified the country's main bankruptcy law to prepare for Alitalia's rescue. Under the so-called Phoenix plan, drafted by Intesa Sanpaolo SpA, a group of 16 local investors led by Piaggio SpA Chairman Roberto Colaninno will put up ¤1 billion ($1.5 billion) to buy the carrier's profitable units and the state's 49.9 per cent stake.
Augusto Fantozzi, a former finance minister, was appointed to conduct the sale and liquidate Alitalia's unprofitable parts.
