Alitalia shares tumbled as much as nine per cent on Friday to a record low ahead of a formal takeover offer from Air France-KLM, after reports said the French carrier planned to carry out a more drastic restructuring than expected.
State-controlled Alitalia, which needs a new owner to fend off bankruptcy, expects to receive a binding offer from Air France-KLM later on Friday. Its board meets on Saturday to examine the proposal and discuss its precarious finances.
Italian daily La Repubblica said the Italian government, which is selling its 49.9 per cent stake in Alitalia, was alarmed that its stake in the combined group would fall to two per cent and as many as 4,000 jobs would be cut under the latest plans.
The government was previously expected to hold a two per cent stake after the takeover and only 1,700 jobs – or about 15 per cent of Alitalia's workforce – were expected to be cut.
Italian officials played down fears over the plans, saying they had yet to see Air France-KLM's offer.
"There's no news of any type, we expect it this evening," outgoing Prime Minister Romano Prodi said in Brussels.
Transport Minister Alessandro Bianchi said the formal offer was expected to arrive before midnight local time (11pm GMT).
Italian news agency ANSA said Air France-KLM's plans included slashing 500 pilot jobs and grounding 42 aeroplanes by year-end – both more drastic than initially expected.
Alitalia shares were down four per cent to €0.55 in early afternoon trade, after earlier falling as much as nine per cent.
Air France-KLM's share swap offer was initially expected to value Alitalia at €0.35 a share, sources said in December, but is expected to value it well below than that now since the share price of both companies has tumbled since then.
"Finally we will get to see this offer," said a trader in Milan. "Given anything above zero will be a good sum, we don't expect a value of more than €0.30 a share. (Reuters)
Alitalia shares dive ahead of Air France-KLM offer