Alitalia’s disclosure that it needs a capital increase of $1.1 billion (Dh4.01 billion) in the first half of the year due to a worsening financial scenario sent shares tumbling in trading on Thursday morning.
Alitalia shares opened down 3.4 per cent to $0.96 (Dh3.50) on the Milan Stock Exchange. The company notified the Italian stock exchange late Wednesday that increasing fuel prices and failure to fully implement a strategic plan had left it in worse financial shape than anticipated.
Air France-KLM are in the midst of negotiations to buy the government’s 49.9 per cent stake in the failing carrier, which is losing $1.48 million (Dh5.4 million) a day. But Italian Transport Minister Alessandro Bianchi said on Wednesday the sale may be put on hold until a new interim government can be formed following the fall of Romano Prodi’s center-left government.
Further complicating the sale prospects, competing bidder Air One, Italy’s second airline, said on Thursday that it has sued Alitalia in an administrative court in Rome for opening exclusive talks with Air France-KLM, seeking to allow several offers to be considered at once.
The company outlined a strategic plan in September last year to help keep Alitalia afloat, including focusing on a single hub in Rome instead of the dual Rome-Milan hub system, and cutting some routes to focus on profitable ones.
But the company said delays in implementing the plan were weighing on its bottom line.
It said it expects its 2008 operating margin, although slightly better than the estimate for 2007, to be considerably lower than what was foreseen in the 2008 plan.
In a separate release, the airline also said that the group’s net debt at the end of December rose nearly 1 per cent to close to S$1.78 billion (Dh6.50 billion), from $1.76 billion (Dh6.42 billion) the previous month. The group’s cash-to-hand short-term financial credits as of December 31 amounted to $544 million (Dh1.99 billion), down $41 million (Dh150 million) from the previous month. (AP)
Alitalia shares down after cash requirement disclosure