Aerospace |
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Reports indicate that The European Union is planning to approve a 2.75 trillion ITL bailout of Italy's national airline, Alitalia SpA. Officials say if it is approved, the subsidy will be disbursed in three installments, subject to certain conditions. Conditions include laying off 1,200 of Alitalia's current staff of 17,000 and the sale of the airline's 35 percent stake in Hungarian airline Malev. The E.U. is expected to make a decision early this week. Although the E.U. commission has not commented on the final stages of the decision, it confirms the amount of aid would be about 2.75 trillion ITL. If Alitalia, Europe's fifth largest airline after British Airways, Lufthansa AG, Air France and KLM Royal Dutch, plans to make any job cuts, the cuts will be up to the company to decide. As for now, senior commission officials are discussing Alitalia's aid request and will make a final decision for approval by the 20-member commission team later this week. The E.U. claims its restructuring plan would effective be in restoring Alitalia's viability. And the commission claims the aid package will mark the end of a vicious cycle whereby Europe's state-owned carriers are rejuvenated merely by handouts from state coffers. It hopes this will open doors for the commission to be the main player in alliances. Subsequently, Alitalia is the only state-owned carrier left that hasn't asked for help from Brussels. If approved, a second disbursement of about 500 billion ITL will be given to Alitalia in May 1998, and the remaining 250 billion ITL will be given in 1999. The E.U. may also place a ban on purchasing stakes in other airlines by Alitalia and may ask the airline to promise not to become a 'fare price leader' until the year 2000. Ninety percent of Alitalia SPa -- the fifth largest airline in Europe -- is controlled by the state holding company Istituto per la Ricostruzione Industriale. |
