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Did CZ (China Southern) ever have any financial problem of late?


AFAIK it's China Eastern performing with a loss...China Southern is profitable (according colleagues I just spoke to)... :pardon:


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well...that was unexpected. CI have reduced flights to kul - they only fly daily now. ke are only flying 5x weekly with 333. BKK gets multiple daily from KE. SIN gets daily 773.


the only thing we have with SkyTeam is the KLM cooperation.


azizul is right on the money. that is my main worry...





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AFAIK it's China Eastern performing with a loss...China Southern is profitable (according colleagues I just spoke to)... :pardon:


I guess thats why SQ and CX through AC was competing for their share of a pie in MU (China Eastern)? Both China Eastern and Air China are new members of the Star Alliance.

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I guess thats why SQ and CX through AC was competing for their share of a pie in MU (China Eastern)? Both China Eastern and Air China are new members of the Star Alliance.


MU is not in Star Alliance or any alliance as of yet. And I believe "AC" means Air China (IATA code is CA). Shanghai Airlines is the other new member of Star Alliance.

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Air France Bids 0.35 Euro/Share For Alitalia


December 14, 2007

Two offers for ailing airline Alitalia under serious consideration by Italy are both well below market price with that of small domestic rival Air One just one euro cent per share, a source close to the talks said on Friday.


Air France-KLM has bid 35 euro cents per share, the source added -- giving the carrier a value of about EUR485 million euros (USD$712.4 million), less than half its market worth. Alitalia also carries about EUR1.2 billion of debt.


Both Air France and Air One declined to comment. The offers are non-binding and both can be reviewed.


Shares in the loss-making airline, which has been hawked by the government for nearly a year, slid after several halts to trading for excessive losses.


Alitalia, whose main attraction for buyers is its dominance of the route from financial capital Milan to Rome, has put off a final decision on the offers to December 18 after the government failed to pick one at a long meeting on Wednesday.


Uncertainty around the sale heightened this week when a group claiming to include Singapore Airlines sent a letter expressing interest to Alitalia's board which met on Thursday.


Singapore Airlines said it had no intention of bidding for Alitalia and it had never heard of "Singapore Airlines Holdings," which was mentioned in the letter, after regulator Consob had asked it to clarify the situation.


And Deutsche Bank slapped down newspaper reports it would advise the mystery group with legal firm Orrick, saying in a statement it saw no reason to agree to a request from the party.


The bid from Air One, backed by Italy's biggest retail bank Intesa Sanpaolo, would be politically expedient as it would keep control with Italians while that of Air France-KLM would take the carrier off the government's hands permanently.




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Rival Alitalia Suitors Promise Cash, Planes


December 17, 2007

Alitalia's suitors Air France-KLM and Air One on Monday detailed plans which could nearly double its capital and promised it new planes, a day before the indebted airline's board meets to pick a partner.


Choice of a partner ultimately rests with the coalition of Prime Minister Romano Prodi, who said there are division over the choice. Deputy Prime Minister Francesco Rutelli said at the weekend neither offer was convincing.


Global giant Air France-KLM's plans include a cash injection of at least EUR750 million euros while Air One, the home challenger, said it would pump in EUR1 billion through a capital increase for the state-controlled airline.


Alitalia, which carries some EIUR.2 billion of debt, has a market value of around EUR970 million -- down from about EUR1.35 billion when the government first put it up for sale a year ago.


Alitalia's main attraction is its dominance of the business route from the financial capital of Milan to Rome. Its attractiveness for Air France-KLM may have increased as rival Lufthansa gets closer to buying Spain's Iberia.


Air France-KLM emerged as a bidder for Alitalia earlier this month after snubbing all earlier attempts by the Italian government to find a buyer for its 49.9 percent stake. Prodi will meet his French counterpart Nicolas Sarkozy on Thursday.


The Franco-Dutch airline said in a statement on Monday it had made a non-binding share exchange offer and that it would buy all Alitalia's convertible bonds.


It gave no details of the share-exchange ratio, the assumed value of Alitalia or timing of the planned offer.


Shares in Air France-KLM were down around 2 percent at EUR23.6, giving it a market capitalization of nearly EUR7.1 billion.


Air France-KLM would immediately inject at least EUR750 million into Alitalia through a capital increase open to all shareholders and fully underwritten by Air France-KLM.


That could allow Rome, which is banned by the European Commission from giving any more money to the loss-making airline, to take a minority stake in the new group.


"Air France-KLM confirms its determination to support Alitalia in its recovery and to relaunch it as a strong national flag carrier with world coverage. The enlarged group will then be able to rely on three strong, complementary brands providing customers with an unparalleled network," Air France-KLM said.


It added that there would be no further redundancies over those already planned by Alitalia, which could mean up to 1,700 job losses.


Air France-KLM added it would replace all Alitalia's Boeing MD80 short/medium-haul fleet and the 767 long-haul fleet.


Air One plans to buy 130 Airbus aircraft to renew Alitalia's fleet, its head, Carlo Toto, told Corriere della Sera newspaper on Monday, with a capital increase for EUR1 billion. His offer puts a 0.1 euro value on Alitalia shares.


Toto, whose bid is backed by Italy's largest retail bank and one of its corporate saviors, Intesa Sanpaolo, said he would be willing to cede around 20 percent of the future company's Rome to Milan slots to meet antitrust regulations.


Air One is already a commercial partner of Lufthansa.




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Although old news, I'll post it nvertheless, for completeness sake:


Alitalia Board Meets Amid Political Division


December 18, 2007

Alitalia's board will weigh bids by Air One and Air France-KLM for the troubled airline on Tuesday but it may delay choosing a partner as the government appears divided ahead of key talks on Thursday.


Italy's prime minister will meet the French president on Thursday. Transport Minister Alessandro Bianchi said on Tuesday he believed the rival bids for Alitalia needed more in-depth study.


"I feel the need to study them better and more in depth," Bianchi told reporters on the sidelines of a conference hours before Alitalia's board was due to meet to discuss the bids.


Bianchi also said he had called a meeting with unions to discuss the Alitalia situation for Wednesday.


Domestic challenger Air One, smaller than state-controlled Alitalia but backed by Italy's No. 1 retail bank Intesa Sanpaolo, has offered 1 euro cent per Alitalia share and total investments of EUR5.3 billion euros by 2012.


Air France-KLM, the world's largest airline by revenues, has bid 35 euro cents per Alitalia share in a share-swap offer and offered to buy all Alitalia's convertible bonds.


But financial details are secondary to a decision which must win over combative unions and national interests that want to keep the loss-making carrier firmly in Italian hands.


"Under Air France's plan, Alitalia would disappear," Intesa Sanpaolo Chief Executive Officer Corrado Passera told Italian daily La Repubblica in an interview published on Tuesday.


"The alliance with Air One would, on the other hand, generate a new carrier, whose main mission would be to make "Italy fly"," he added.


Regional interests are also at stake as Air France's plan would keep Rome's Fiumicino Airport as its Italian hub while rival Milan's Malpensa would just provide local connections.


Alitalia's board was expected to meet at 1500 GMT. Alitalia unions would meet beforehand at 1430 GMT and they are threatening massive strikes over the Christmas holiday period should they not like the choice of the partner.


"I don't know what the board will do," Alitalia Chairman Maurizio Prato was quoted by Italian media as saying. "Decisions are taken on a day-to-day basis."


Italian media say Italian Prime Minister Romano Prodi and Economy Minister Tommaso Padoa-Schioppa both favor Air France's offer, while Foreign Minister Massimo D'Alema and Transport Minister Alessandro Bianchi are seen backing an "Italian solution".


Shares in Alitalia were zig-zagging on Tuesday, reflecting uncertainty over a possible decision for Alitalia.




Alitalia's Board Still Seen Preferring Air France


December 19, 2007

The board of state-owned Alitalia still seems to prefer Air France's bid to an offer from domestic airline Air One, but cannot overrule the say-so of the government, which holds key talks this week.


Alitalia's board met on Tuesday to pick one of the suitors for exclusive talks but decided to reconvene on Friday to give the government, which owns 49.9 percent of the loss-making airline, time for the talks.


It was the second time this month a decision has been postponed, signaling that the government is still torn.


"For Alitalia's top management... Air France-KLM's offer is by far the best option," Il Sole 24 Ore said on Wednesday.


Transport Minister Alessandro Bianchi was to meet Alitalia's unions later on Wednesday. Italian Prime Minister Romano Prodi will meet French President Nicolas Sarkozy on Thursday and a cabinet meeting will follow on Friday.


Alitalia Chairman Maurizio Prato, who was appointed this summer to manage the sale of the state-controlled airline, has openly said Air France's offer is more in line with Alitalia's own restructuring plan and expressed doubts about Air One's bid.




Italy Delays Alitalia Decision To January


December 20, 2007

Italy has deferred for a month a final decision on who should buy Alitalia, underlining divisions within the coalition government.


The carrier, which has already twice postponed choosing either Air France-KLM or Air One as its preferred buyer, will be allowed to pick a bidder for exclusive talks at a board meeting on Friday, a government statement said.


But the government, which holds a 49.9 percent stake in the airline and had promised to find a buyer by Christmas, will decide by mid-January whether it approves of the choice.


The latest postponement in the long-running sale of the carrier reduces the chances of strikes over the busy Christmas period, although transport unions called a general strike for January 28 after a meeting with Transport Minister Alessandro Bianchi.


The unions, which staged a strike last month, say the government is neglecting their sector and has failed to resolve a number of issues, including the sale of Alitalia.


Analysts say Air France is more likely to turn around the airline, which has been on the block for more than a year and loses more than a million euros a day.


Alitalia's board is also expected to favor the Franco-Dutch carrier, which has offered more for the shares and promised to cut fewer jobs.


But Air One is seen as the politically expedient choice and has won the backing of Alitalia's combative unions, Italian business leaders and regional politicians who want to keep the company in Italian hands.


Air One said on Wednesday that no decision should be taken until it could hold an in-depth meeting with Alitalia's adviser.


Alitalia Chairman Maurizio Prato, who was appointed this summer to manage the sale of the state-controlled airline, has said Air France's offer is more in line with Alitalia's own restructuring plan and expressed doubts about Air One's bid.


Italian Prime Minister Romano Prodi said Alitalia's sale was not on the agenda of a meeting with French President Nicolas Sarkozy on Thursday, even though it was initially billed as key for a possible alliance between the Italian and French carriers.


Alitalia's unions have said they want to meet the company's management before any decision is made.


Alitalia shares closed up 2.1 percent at 74 euro cents, valuing the airline at about EUR1 billion euros. The airline carries some EUR1.2 billion of debt.


Italian media say Prodi and Economy Minister Tommaso Padoa- Schioppa both favor Air France's offer, while the deputy prime ministers and Bianchi -- former communists and a former Green -- are expected to back an "Italian solution."


Air France has bid 0.35 euros per Alitalia share, offered to buy all of the airline's convertible bonds and said it would cut up to 1,700 jobs.


Air One, smaller than Alitalia but backed by Italy's No. 1 retail bank, Intesa Sanpaolo, has offered 1 euro cent per Alitalia share and total investments of EUR5.3 billion by 2012 and 3,700 job cuts.




Italy Looking For Better Alitalia Bids


December 20, 2007

Italy wants better offers from Air France-KLM and domestic challenger Air One for its loss-making airline Alitalia, a minister told a newspaper on Thursday, a day before the company chooses a buyer.


"What would seem useful to me is to work within the offers to improve them," Transport Minister Alessandro Bianchi told Il Sole 24 Ore in an interview published in its Thursday issue.


Italy, which holds a 49.9 percent stake in the airline, has deferred for a month to mid-January a final decision on who should buy Alitalia, underlining divisions within the ruling coalition government.


The carrier, flying under the weight of about EUR1.2 billion euros of debt and losing more than EUR1 million a day, has already twice postponed a choice between the two suitors.


It is expected to pick one for exclusive talks at a board meeting on Friday.


The airline, which has been up for sale for a year, dominates the lucrative business route between Italy's financial capital Milan and Rome.


Air France-KLM has bid 0.35 euros per share for Alitalia, offered to buy all of the airline's convertible bonds and said it would cut up to 1,700 jobs.


Air One, smaller than Alitalia but backed by Italy's leading retail bank, has offered 1 euro cent per share, total investments of EUR5.3 billion and 3,700 job cuts.


Air One took out full page advertisements in newspapers on Thursday to trumpet its credentials for creating "the number four company in Europe," which would also be open to "a big international alliance."


Air France-KLM's offer would take the carrier off the government's hands permanently while Air One would keep the Italian flagship role of Alitalia and already has the backing of combative unions and regional politicians worried that Italy's north would lose its Malpensa hub with Air France-KLM.


Il Messaggero newspaper suggested north Italian businessmen might come to the aid of Air One.


Bianchi said the government needs to talk to the bidders to "eliminate weak points, suggest corrections that further the public interest," particularly over the future of Alitalia's brand, routes and international strategies.


"In the past few years the government has invested EUR5 billion - 6 billion to save Alitalia so it has the right to intervene," Bianchi told Il Sole 24 Ore.


Prime Minister Romano Prodi meets French President Nicolas Sarkozy this evening and although he has said Alitalia is not on the agenda, Sarkozy said the two could discuss it.


Newspapers have speculated that there could be either a break-up of Alitalia's interests between the two suitors or that the two could combine their plans.


Bianchi said he did not know of any such proposals.




Alitalia Picks Air France As Preferred Bidder


December 22, 2007

The board of Alitalia chose Air France-KLM as its preferred buyer on Friday, saying the French-Dutch carrier was a better match than a small Italian airline.


Its unanimous decision on Air France-KLM's non-binding offer must still be approved by the government, which holds a 49.9 percent stake in the money-losing flagship airline and might face pressure against letting it pass into foreign hands.


It urged the government to decide by mid-January on a bidder for exclusive talks, as planned, "in light of the company's critical financial situation."


Alitalia is hemorrhaging losses at a rate of EUR1 million euros a day and is weighed down by EUR1.2 billion of debt.


Air France-KLM, whose interest has stirred up nationalist sentiment in Italy, assured it would not downgrade the country's largest airline into a regional carrier.


It said it aimed to strengthen Alitalia and outlined long-term investments worth EUR6.5 billion (USD$9.34 billion), which would partly be used to upgrade the airline's ageing fleet of medium- and long-range aircraft.


That compares with EUR5.3 billion in planned long-term investments by the other bidder, Air One.


"The reputation of the Alitalia brand, a key asset for the whole group, will be developed in Italy and abroad," said Air France-KLM Chairman and Chief Executive Jean-Cyril Spinetta.


Spinetta said Air France-KLM was "delighted to have had our plan accepted as the best for the future of Alitalia."


But Air One, whose plan is favored by some politicians and unions, fired off a statement saying it still hoped to clinch a deal -- even without the support of Alitalia's board.


It said it would take its offer for Alitalia to the airline's biggest shareholder, the Italian state.


Air One has played up its Italian credentials to win support for its bid. It has the backing of regional politicians worried about northern Italy losing its Milan hub under Air France-KLM.


Alitalia shares ended down 1.96 percent at 0.7583 euros before the news. They will not resume trading in Milan until the market reopens on December 27.


In Paris, Air France-KLM was last quoted up 1.41 percent at 23.77 euros. That market will be open for half a day on Monday.


Alitalia said in a statement Air France was willing to preserve the airline's extensive national network.


Alitalia dominates the lucrative route between Rome and Milan, but has been on the brink of bankruptcy for years and been kept going by state aid.


Air France-KLM is bidding 0.35 euros per share and is offering to buy all convertible bonds, according to a source close to the talks. It plans to cut up to 1,700 jobs.


Air One is offering 0.01 euro per share with investments of EUR5.3 billion. It plans 3,700 job cuts. Smaller than Alitalia, it is backed by Italian bank Intesa Sanpaolo.




Alitalia Swaps Heathrow Slots For EUR92 Mln


December 25, 2007

Italian airline Alitalia said it has agreed to exchange three of its 13 pairs of slots at London's Heathrow Airport for an estimated EUR92 million euros (USD$132 million).


The state-controlled airline, which is losing about EUR1 million a day, offered no details about the nature of the exchange. It said in a statement the slots being swapped were "non-strategic."


Alitalia said the swap was expected to add EUR54 million to its 2007 balance sheet. The remaining EUR38 million would be added to 2008 accounts.


Officials at Alitalia's press office said they did not have any additional information on the exchange, including the other party in the exchange and whether there was any additional compensation for the Heathrow slots beyond cash.


The airline's board of directors on Friday backed an acquisition bid from Air France-KLM. A decision on whether to enter into exclusive talks with Air France-KLM now rests with Alitalia's largest shareholder, the Italian state.


The government has said it will make its decision by mid-January, a deadline Alitalia management has said is important given the troubled state of Alitalia's accounts.


Alitalia reported on Monday that net debt on a group level rose 0.8 percent in November to EUR1.19 billion (USD$1.71 billion) by the end of the month.


The group had EUR95 million in cash-to-hand and short-term financial credits as of November 30, down 7.7 percent from the end of October.


It said passenger traffic increased 0.7 percent in November year over year, while capacity fell by the same amount.




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wow...Alitalia is bleeding badly. 35 euro cents per share is pretty rubbish. Seems that MAS was in an almost similar position a while back.


I am disappointed that there was no mention of joining an alliance in the BTP2. I wouldn't mind the damn snack box if they joined an alliance... I don't know why IJ thinks he can go alone.

Edited by Izanee

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Some more 'historic' AZ-news, to keep you updated:


Italian Think-Tank Says Let Alitalia Go


December 27, 2007

An Italian think tank called on politicians on Wednesday to release their grip on flag carrier Alitalia and sell the airline to foreign bidder Air France-KLM.


Prime Minister Romano Prodi's cabinet will discuss on Friday what to do with the state's 49.9 percent stake in Alitalia, whose board has recommended the Air France bid and rejected one by a smaller Italian airline which is preferred by the biggest unions and many politicians.


Opponents to the foreign bid say the larger airline would swallow up Alitalia and turn it into a regional carrier. Politicians in the wealthy north say Air France's plan to concentrate operations in Rome, downgrading Milan, would be disastrous.


But the free-market Bruno Leoni Institute (IBL) said resistance to a foreign takeover was a symptom of Italy's reluctance to allow the market to decide if and how big companies survive.


"The fear of the political classes and the unions is all about losing decision-making power over Alitalia," said Andrea Giuricin of the IBL. "But it is precisely these two groups of people who are responsible for Alitalia's state of crisis."


Inefficiencies, incessant union disputes and Alitalia's two hubs -- Rome and Milan -- are among the reasons blamed for its losing EUR1 million euros (USD$1.44 million) a day despite dominating the market in one of the world's most popular tourist destinations.


After years of state support -- now outlawed under European Union law -- Prodi vowed to completely privatize Alitalia, despite opposition from parts of his coalition.


He now faces the tough decision of whether to sell to the Franco-Dutch airline or over-rule Alitalia's board and opt for a bid by private airline Air One, backed financially by Banca Intesa Sanpaolo and politically by the main unions, the head of employers' group Confindustria and northern politicians.


Air France-KLM promises to invest EUR6.5 billion in long-term investments into Italy's flag airline, preserve the Alitalia brand and an extensive network of routes in Italy. An Air One bid has the attraction of keeping Alitalia Italian.


A union representing air crews went against the current and came out on Wednesday in favor of the Air France bid. Avia said it would ballot its members of January 3 and expected a resounding yes to the foreign takeover.


"Politicians should stop meddling with business decisions taken by a board which has knowledge and legitimacy," Avia President Antonio Di Vietri told ANSA news agency. "Defying those decisions would lead to bankruptcy within months."


Prodi has declined to be drawn on his preference and issued a statement denying an assertion by the Financial Times that he and his economy minister, Tommaso Padoa-Schioppa, favored the Air France bid while most of his cabinet preferred the home-grown option.




Italian PM Says Protests Won't Sway Alitalia Sale


December 28, 2007

Italian Prime Minister Romano Prodi said Alitalia would be sold to a group capable of folding the carrier into a global network, and promised regional protests would not sway his government's choice of buyer.


The comments were the latest boost to Air France-KLM's bid for the loss-making national airline, whose board last week backed the French company's bid over one from small Italian domestic rival Air One.


The government is divided on which bid to choose for the state's 49.9 percent stake in Alitalia and has been besieged by intense lobbying from unions and regional politicians who want it to remain in Italian hands.


The government has the final word on who gets the Rome-based carrier, which is losing more than a million euros each day.


Prodi reiterated his government would decide by mid-January on whether it too prefers Air France-KLM, and said the decision would be based on the "buyer's ability to integrate Alitalia into a global system".


"Now we have only two options and we have to choose the best," Prodi told a year-end news conference. "I'm sorry, but I won't take note of protests, or pressure from groups or corporate lobbying."


Alitalia's major unions and many Italian politicians, particularly in Italy's north, have stepped up lobbying against the Air France-KLM bid.


They fear Alitalia will be reduced to a regional airline that follows orders from Paris and jobs will be lost at Alitalia's Milan Malpensa hub. Air France has said it wants to develop Alitalia's Rome hub, while scaling back in Milan.


Three pilot and flight assistant unions on Thursday warned they were ready to "paralyze" Italy for days if the government did not disown the decision by Alitalia's board to back Air France-KLM.


The governor of Italy's northern Lombardy region, Roberto Formigoni, said Prodi appeared "to be losing it a bit" and warned the wrong choice would make the country poorer.


The Italian government is expected to discuss the matter at a cabinet meeting on Friday. Prodi and his economy minister are said to back Air France while other influential ministers -- including Transport Minister Alessandro Bianchi -- are said to prefer the Italian option.


Alitalia is valued at about EUR1.1 billion euros (USD$1.6 billion) on the market and holds a similar amount of debt. On track for another year in the red, the airline says it has enough cash to last a year if it begins selling off assets.


Earlier this week it said it had sold three of its 13 pairs of slots at London's Heathrow Airport for EUR92 million. It declined to identify the buyers.


In an interview with an Italian daily, Alitalia Chairman Maurizio Prato refused to speculate on whether the government would back his board's choice but warned that the carrier's precarious financial condition meant it was running out of time.


"I hope that the decision, whatever it might be, would be taken quickly," Prato told Il Sole 24 Ore.


"We are in a phase of vital importance for Alitalia and, in my opinion, it is the final chance. There won't be time for other attempts."




Italian Minister Says Alitalia A Victim Of Politics


December 31, 2007

Alitalia has been exploited by politicians for too long and could not continue in its present state, Italy's economy minister told a newspaper, defending the decision to pave the way for a deal with Air France-KLM.


The Italian government, which holds a 49.9 percent stake in the carrier, last week approved Alitalia pursuing talks with Air France-KLM.


The decision sparked an outcry from unions and politicians who want the airline to remain in Italian hands. Italy's three biggest unions preferred a rival bid by Air One, a privately owned Italian airline.


"For too long, politicians have exploited the situation at Alitalia for their own gain," Tommaso Padoa-Schioppa, whose ministry oversees privatizations of state firms, told Italian daily Corriere della Sera. "It could not continue anymore."


Alitalia loses more than one million euros (USD$1.47 million) a day, is frequently hit by strikes, and has been saved from bankruptcy in the past by state bailouts.


Protests from officials in Italy's north -- who fear job losses and a smaller role for Alitalia's Milan Malpensa hub -- were not helping the carrier's plight, Padoa-Schioppa said.


He said he had hoped Alitalia would be acquired by a group of businessmen from northern Italy, but none came forward. Private equity firm TPG -- one of the initial contenders eyeing Alitalia -- had searched and failed to find a partner in the region, he said.




Air France Eyes Capital Rise, Listing For Alitalia


January 10, 2008

Air France KLM plans to revive Alitalia through a sizable capital infusion and list the combined group in Milan as well, the French carrier's CEO said during a visit to Rome to drum up local support for its bid.


But Air France has yet to decide whether to take over loss-making Alitalia's services and maintenance unit AZ Servizi, which is run as a separate company, CEO Jean- Cyril Spinetta told reporters in Rome.


Air France received the green light at the end of last year to start exclusive talks to buy Alitalia, but faces hostility from unions and some politicians who fear job losses, mainly at its Milan hub and at the troubled AZ Servizi unit.


Alitalia's chairman had been pushing Air France to consider buying AZ Servizi as well. If it did, the Italian state would end up with a 5 percent stake in the combined company, the UGL union said earlier on Wednesday.


The Italian government, which owns a 49.9 percent stake in Alitalia, had been expected to own a 3 percent stake in the new group after the share-swap deal was completed.


Spinetta played that down, saying it was impossible to say how much the Italian state would own in the combined company.


A decision on AZ Servizi -- which is state-controlled and in which Alitalia has a 51 percent stake -- would be taken based on "economic and social" considerations, he said.


Spinetta also defended plans to scale down Alitalia's presence at its Milan Malpensa hub, which has set off a firestorm of protests from unions and politicians in northern Italy who are lobbying hard against the plans.


"The big majority of Alitalia's losses come from Malpensa," Spinetta said, adding that the hub would not be abandoned altogether. "Continuing to ignore this fact would bring about the end of Alitalia."


He also confirmed Air France-KLM would cut 1,700 jobs. If it succeeded in buying up all of Alitalia shares, the combined Air France-KLM-Alitalia group would be listed on the Milan bourse in addition to its existing listings in Paris, Amsterdam and New York, he said.


Spinetta earlier on Wednesday met Alitalia Chairman Maurizio Prato and Economy Minister Tommaso Padoa-Schioppa, whose ministry oversees privatizations of state assets.


He said he had also wanted to meet Italian Prime Minister Romano Prodi, but that the premier did not want to meet him until a final decision on the sale was taken.


The eight weeks of exclusive talks will formally start at the end of this week or early next week when a letter announcing it is sent, Spinetta said.


The French carrier's CEO also met representatives of the UGL union, the first of several key meetings he is expected to have to win their backing. Analysts say getting Alitalia's strike-prone unions on board will be key to closing a deal.


Three other major Alitalia unions did not meet Spinetta on Wednesday, but instead wrote to Italian Prime Minister Romano Prodi seeking an urgent meeting to discuss the airline's sale.




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Delta Pilots Meet To Weigh Merger Possibility


January 10, 2008

Leaders of the Delta Air Lines pilots' union are meeting this week to address merger possibilities involving the carrier, the union said late on Wednesday.


"Consolidation may indeed be at our door," Lee Moak, chairman of the pilots' union, said in a letter to members. "How we face its challenges will have a significant impact on our careers and profession for decades to come."


Merger speculation has engulfed Delta since the autumn. The carrier set up a special board committee to review potential consolidation but management has not set a timetable for the panel to reach any conclusions.


A Delta spokeswoman on Wednesday night had no direct comment on the pilots' meeting but said the carrier would not provide updates on the board committee's work.


Delta shares rose USD$1.75, or 14 percent, to close at USD$13.52 on Wednesday after UBS raised ratings and increased price targets on several US airlines, including Delta.


Analyst Kevin Crissey wrote in a note to clients that UBS believes a major merger "is more likely than not" in the next six months with a Delta/Northwest Airlines combination the "most likely" possibility.


Delta shares rose to USD$14.20 in after-hours trading on the New York Stock Exchange.


Delta executives have said the company does not have to merge to be successful but high fuel prices and softening travel demand have spurred questions about the industry's overall financial health in 2008 and intensified merger speculation around a handful of big carriers.


The union reiterated that Delta pilots do not oppose consolidation under the right circumstances, but will not stand idly by if a deal is proposed they do not favor.


"Any attempt at consolidation will fail without the active involvement and support of the pilots from the earliest formative stages of the effort," Moak said.


The pilots have retained legal and financial advisers to address potential mergers. The group has also reactivated its strike-preparedness committee in the event that it wants to increase its leverage over the process.


The strike committee also supports picketing and lobbying efforts and played an important role in Delta's successful effort to fend off an merger bid last year by US Airways.




Delta To Start United, Northwest Merger Talks


January 10, 2008

Delta Air Lines plans on Friday to ask its board for permission to begin formal merger talks with both Northwest Airlines and United Airlines parent UAL, a newspaper reported on Thursday.


Citing people familiar with the matter, the Wall Street Journal said Delta would aim to ultimately choose between the two carriers.


Delta, which emerged from bankruptcy last spring after rebuffing a hostile takeover offer by US Airways, set up a special board committee months ago to help it review its strategic options, including mergers.


Betsy Talton, spokeswoman for Delta, said the carrier was not providing updates on the special committee's work while it is in progress.


In November, Delta moved quickly to deny media reports that it was in merger talks with UAL.


Jean Medina, a spokeswoman for UAL, which has been a vocal proponent of airline mergers, said, "Our position on the need for consolidation generally in the industry is well known, and we don't comment on rumors or speculation."


Airline shares, already soaring on renewed merger speculation ahead of the report, continued to rally.


In late afternoon trading, Delta shares rose 20 percent to USD$16.18, Northwest surged 37 percent to USD$16.49, and UAL climbed 23 percent to USD$32.00.


A deal between Delta and either airline would likely create the world's largest carrier, overtaking American Airlines. An acquisition of either airline by Delta would be worth at least USD$3.5 billion, based on current market values.


According to a study conducted a few months ago for hedge fund Pardus Capital Management, which was lobbying for a deal, a Delta-United merger would generate synergies of USD$585 million and combine Delta's transatlantic presence and strength in the New York market with United's Asia routes and its position on the US West Coast.


The study estimated that a combination with Northwest would net the combined carrier USD$1.5 billion in savings by combining smaller hubs, but it would not expand the network to the same extent as a Delta-United deal.


The modest recovery in the US airline industry has begun to flag amid high fuel prices and a sagging US economy. Most major US airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.


Mergers are seen as a way to stabilize the volatile and fragmented industry by allowing carriers to cut costs, reduce capacity, and raise fares.


Some industry insiders suggest any proposed deal between major carriers would stand a better chance of clearing US antitrust review under the Bush administration, which has approved two big airline mergers, rather than a Justice Department potentially controlled by Democrats beginning in 2009.


For a deal to succeed, Delta also would have to win over employees, especially its unionized pilots, who helped block US Airways' effort.


"Consolidation may indeed be at our door," Lee Moak, chairman of the Delta pilots' union, said in a letter to members on Wednesday.


"Any attempt at consolidation will fail without the active involvement and support of the pilots from the earliest formative stages of the effort," said Moak.


In September, Delta agreed to protect the seniority rights of its employees in the event of a merger.




A Delta Merger Would Face Tough Antitrust Review


January 14, 2008

Delta Air Lines would face an unprecedented airline antitrust review if it decides to propose a merger with either Northwest Airlines or United Airlines parent UAL.


Industry consultants, lawyers, and former government officials agree either merger would present the US Justice Department with its toughest airline test. And with a crucial election year underway, Congress would certainly weigh in.


"None of this is going to be easy," said Darryl Jenkins, a Virginia-based airline consultant. "This is an awfully big merger. No matter who does it, it will be looked at very carefully."


A Delta merger review would include serious scrutiny of large international route networks. It would also test a popular assumption that the merger parties would get more favorable treatment from the Bush administration compared with a possible Democratic one in 2009.


Antitrust lawyers said none of the leading presidential candidates was considered an antitrust maverick, although Democrats have had a reputation for being more aggressive than Republicans in challenging mergers.


James Burnley, a former US transportation secretary under President Ronald Reagan, said there is merit in rolling out something soon to ensure scrutiny by Republicans, but "that doesn't mean anyone gets a free pass."


Delta management wants to begin formal merger talks with Northwest and United, the Wall Street Journal reported last week. The airlines have not commented.


For sheer size and reach, No. 3 Delta hooking up with either No. 2 United or No. 5 Northwest is only comparable to an earlier bid by United to swallow US Airways. That attempt collapsed in 2001 after a lengthy antitrust review, completed by the Bush Justice Department, raised serious competition concerns.


All experts agreed Congress would seek to have influence. Lawmakers -- worrying about the impact on airline service to their districts, jobs, and ticket prices -- could not halt a merger outright. However, they could pressure the White House and antitrust enforcers.


Delta appealed to lawmakers in its successful effort to turn back a hostile merger bid from US Airways last year.


Two aviation heavyweights in the Democratic-run House of Representatives, Reps. James Oberstar of Minnesota, where Northwest is headquartered, and Jerry Costello of United's home base of Illinois, are both doubtful of big mergers. They have signaled in recent months at hearings and in interviews that the industry should proceed carefully.


The most comparable period for consolidation, experts say, was the mid 1980s when a flurry of merger activity involving healthy or relatively healthy companies.


A merger between Delta and Northwest, or with United, would be unprecedented, because of their size and the fact that all three carriers are financially stable.



The Bush administration has approved two big airline mergers: American Airlines' acquisition of TWA in 2001 and the merger of US Airways and America West in 2005. Both involved financially distressed companies, US Airways and TWA, a situation that generally gets a more sympathetic government review.


The paramount concern for the government would be the market share of a United-Delta or Northwest-Delta combination.


Delta and United together comprise nearly a quarter of domestic service based on passenger traffic. Delta and Northwest account for about 18 percent, the latest Transportation Department figures show.


Dominance on specific routes and at key airports would also be carefully scrutinized. Delta commands 53 percent of business at its Atlanta hub and a third of flights at Salt Lake City and Cincinnati.


United's share at Chicago's O'Hare Airport is 40 percent; 42 percent at Denver and San Francisco, and 21 percent at Washington Dulles. Northwest has 66 percent of the business at Minneapolis, 60 percent at Detroit, and half of all flights at Memphis.


Antitrust officials characteristically would seek divestment at certain airports, depending on the merger combination, and target overlapping routes.


One insider, who did not want to speak for attribution because he consults for major airlines, said he did not "see any show stoppers" in airports or routes for either Delta combination.


It is unclear, however, how the Justice Department would view the potential combination of international routes as well as the carriers' deep alliances with foreign carriers. Both Delta and Northwest have close ties to Air France-KLM, while Delta and United are members of competing global alliances.




Northwest Must Involve Staff In Merger Talks


January 14, 2008

The flight attendants' union at Northwest Airlines on Monday said a memo from the carrier's chief executive about a possible Northwest-Delta Air Lines merger was welcomed, but they hoped it was not simply a hollow gesture.


"It's more words. We haven't seen much action on the part of Doug (Steenland)," said Kevin Griffin, Northwest Association of Flight Attendants president. "That's sort of something we need in these times," he said.


Griffin was responding to a January 11 memo from Steenland addressing speculation that Northwest may soon begin merger talks with Delta.


Delta is expected to start discussions with both Northwest and United Airlines parent UAL.


Steenland acknowledged in the memo to employees that Delta may begin merger talks with UAL and Northwest. He stopped short of saying Delta had approached Northwest, but his message to employees indicated a willingness to listen to proposals.


"Doing nothing could be our worst alternative," Steenland said in the memo. "If we wait to react to what others do we could be left with options that are undesirable or with no options at all.


"You can be sure that we are giving this very important issue the serious attention it deserves and that we will weigh carefully the strategic implications of each course of action available to us," he said.


UAL has declined to comment on talk of a possible merger with Delta.


Northwest soured its relationship with flight attendants in 2006 when it used bankruptcy protection to void its contract with the workers and impose wage and benefit concessions. The flight attendants later ratified a negotiated deal.




Northwest Weighs All Options Amid Merger Talk


January 16, 2008

Northwest Airlines, reportedly in merger discussions with Delta Air Lines, must consider its options pro-actively to ensure a strong place in the ultra-competitive airline industry, the carrier's chief executive said in an internal memo to employees on Tuesday.


"...We need to pro-actively consider all options available to us and not just wait for our future to be dictated to us," CEO Doug Steenland said in the memo.


Steenland's memo was in response to intensifying speculation that Northwest and United Airlines parent UAL are both in merger discussions with Delta, the No. 3 US airline.


The CEO did not confirm in his message that Northwest was, in fact, in talks with Delta, but he did not deny it. His memo reiterated some of the sentiments he expressed to employees last week.


Northwest spokeswoman Tammy Lee said, "We are going to continue our policy of not commenting on speculation or media coverage related to merger talks."


UAL also has declined to comment on talk of a possible merger with Delta.




Delta In Merger Talks With Northwest


January 17, 2008

Delta Air Lines has begun merger talks with Northwest Airlines, the office of House of Representatives Transportation Committee Chairman James Oberstar said on Wednesday.


The Minnesota Democrat on Tuesday met senior Northwest executives who told him that discussions were underway and that Northwest does "see a benefit" in a merger with Delta, Oberstar spokesman Jim Berard said.


Northwest also told Oberstar that Delta is looking at United Airlines.


Oberstar generally does not support consolidation involving major carriers because of the potential impact on competition, prices and service, especially to small communities. The current situation concerns him even more because he believes a Delta merger will spur other deals.


"They would have to do a good job of convincing him that this is a good thing on a wide scale, not just to the shareholders," Berard said.


Berard said Oberstar would likely hold hearings on any proposed merger.


Northwest is the largest employer in Minnesota.


Congress cannot stop a merger outright, but it can pressure antitrust regulators and companies. Delta successfully leveraged its muscle on Capitol Hill to beat back a hostile bid by US Airways last year.


All three airlines have declined previously to discuss reports of merger talks.




Merger May Be In Workers' Best Interest - Delta CEO


January 17, 2008

Delta Air Lines Chief Executive Richard Anderson told employees that a merger may be in their best interest.


"We have said that Delta would be open to consolidation if it was in the best interests of our shareholders and our employees," Anderson said in a weekly voicemail to employees. "We have the best interests of Delta and its employees in mind."


He did not comment on a report in The Wall Street Journal on Tuesday that Delta is in merger talks with both Northwest Airlines and United Airlines parent UAL and aims to select a partner by early February.


Delta, Northwest and UAL have declined to comment on the reported talks.


Managers are working to win over employees, who gave up wages and benefits in order to keep the airlines operating during the five-year slump following the September 11, 2001, attacks.


Airline workers, especially pilots, have a powerful voice in the industry and could hobble a deal if they disapprove.


In a similar move, Northwest CEO Doug Steenland sent a memo to employees on Tuesday saying the carrier needed to consider all options in order to stay competitive.


Northwest cannot "just wait for our future to be dictated to us," Steenland said in the memo.


The US airline industry is trying to rescue its fledgling recovery, which is threatened by high fuel prices and a softening economy. Most major US airlines are expected to post losses for the fourth quarter of 2007 after profits earlier in the year.


Mergers are seen as a way to stabilize the industry by allowing carriers to cut costs, reduce capacity and raise fares.


Delta has been at the forefront of airline merger talk for months. In November, it said it had set up a special board committee to help it review strategic options, including mergers.


Anderson said high fuel prices, which are hovering near record levels, require Delta to examine its options.


"With these fuel prices at the levels we haven't seen before, it's important that we always be certain that Delta is in a safe harbor and that it is a leader in the global airline industry," he said.


Delta, which emerged from bankruptcy last spring after fending of a hostile takeover bid from US Airways, is expected to post a loss for the fourth quarter.


Anderson told employees that a merger could "make Delta a stronger and more viable enterprise."


"It will improve your situation at Delta, all of our situations at Delta," he said.




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Rome Expects 'Far From Negligible' Air France Stake


January 15, 2008

The Italian state will end up with a "far from negligible" stake in the combined group if Air France-KLM completes a proposed acquisition of Alitalia, Italy's economy minister told parliament on Tuesday.


The French carrier kicked off exclusive talks to buy Alitalia on Tuesday after being chosen as potential buyer in December. Talks are expected to last about eight weeks.


Air France-KLM has proposed a share swap offer for the ailing Italian airline, which would leave the Italian state with a stake in the new group since it holds 49.9 percent of the Italian carrier.


The Italian state was initially expected to end up with a 3 percent stake, but a union briefed on the matter has said it could have as much as 5 percent if Alitalia's ground services unit AZ Servizi was also included in the deal.


Economy Minister Tommaso Padoa-Schioppa dealt a blow to small Italian airline Air One's hopes of returning to the competition for Alitalia, calling its proposed offer excessively optimistic and inferior to that of Air France.


The Italian government supported Air France-KLM over Air One last month when picking a partner for exclusive talks to buy Alitalia, but Air One -- backed by some politicians and unions -- has continued to lobby against the choice in the hopes of overturning the decision.


Separately, a source close to Air France-KLM said the French carrier would treat Alitalia on a par with its Air France and KLM units after any deal, denying a report by French newspaper La Tribune that it would not be given the same autonomy as KLM, partly because of its precarious financial condition.




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Delta, Northwest Merger Deal Imminent


April 14, 2008

Delta Air Lines and Northwest Airlines aim to finalize a merger agreement within days to create the world's largest airline, a source familiar with the situation said on Sunday.


The airlines aim to push ahead with an agreement even if they have not yet received the support of Delta's 6,000 pilots, the source said.


The airlines, which have seen deal talks collapse before, still must finalize significant details on the timing and terms of the agreement, the source said.


The Financial Times said a deal could be announced as early as Monday, while The Wall Street Journal said the agreement could be unveiled on Tuesday.


Delta and Northwest declined to comment.


The talks between the companies previously fizzled out in March when the pilots' unions on both sides failed to agree on how seniority would apply for their roughly 12,000 members in a combined carrier.


Seniority is important for pilots because it helps determine pay, work schedules and the size of aircraft they fly.


Earlier this year, pilots at Northwest had said they would support a merger with another carrier if the workers received a stake in the combined airline.


Delta's pilot union helped derail a hostile takeover bid by US Airways last year by rallying opposition from the company's bankruptcy creditors committee and employees.




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News release from Delta Airlines:


Delta Air Lines, Northwest Airlines Combining To Create America's Premier Global Airline


Customers, communities to benefit from expanded global route system, more competitive, financially secure airline


No hub closures; improved international access to benefit small communities

Merger helps offset record oil prices, creates stronger global airline to compete in Open Skies environment


Merger combines Delta’s strengths in the South, Mountain West, Northeast, Europe and Latin America with Northwest’s leading positions in the Midwest, Canada and Asia; competition will be preserved and enhanced as a result of complementary networks


Delta pilot leadership reaches agreement on post-merger contract


Employees to be provided seniority protection and equity in the new airline


World headquarters of combined airline to be in Atlanta, with executive offices in Minneapolis/St. Paul and major airline operations and employee base remaining in Minnesota


Integrated SkyTeam frequent flyer programs and partner networks enable faster integration; existing Air France, KLM joint venture partnerships strengthened



ATLANTA, Georgia and EAGAN, Minnesota – April 14, 2008 – Delta Air Lines Inc. (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) today announced an agreement in which the two carriers will combine in an all-stock transaction with a combined enterprise value of $17.7 billion, creating America’s premier global airline. The new airline, which will be called Delta, will provide employees with greater job security, an equity stake in the combined airline, and a more stable platform for future growth in the face of significant economic pressures from rising fuel costs and intense competition. Small communities throughout the United States will enjoy enhanced access to more destinations worldwide. Customers also will benefit from the combined carriers’ complementary route networks, which together will offer people greater choice, competitive fares and a superior travel experience to more cities than any other airline. In addition, combining Delta and Northwest will create a global U.S. flag carrier strongly positioned to compete with foreign airlines that are continuing to increase service to the United States.


Delta CEO Richard Anderson will be chief executive officer of the combined company. Delta Chairman of the Board Daniel Carp will become chairman of the new Board of Directors and Northwest Chairman Roy Bostock will become vice chairman. Ed Bastian will be president and chief financial officer. The Board of Directors will be made up of 13 members, seven of whom will come from Delta’s board, including Anderson, and five of whom will come from Northwest’s board, including Bostock and Doug Steenland, the current Northwest CEO. One director will come from the Air Line Pilots Association (ALPA).


Delta will have executive offices in Atlanta, Minneapolis/St. Paul and New York, and international executive offices in Amsterdam, Paris and Tokyo. The company’s world headquarters will be in Atlanta. Delta is committed to retaining significant jobs, operations and facilities in Minnesota.


Combined, the company and its regional partners will provide access to more than 390 destinations in 67 countries. Delta and Northwest, together, will have more than $35 billion in aggregate annual revenues, operate a mainline fleet of nearly 800 aircraft and employ approximately 75,000 people worldwide.


In an industry where the U.S. network carriers have shed more than 150,000 jobs and lost more than $29 billion since 2001, the combination of Delta and Northwest creates a company with a more resilient business model that is better able to withstand volatile fuel prices than either can on a standalone basis. Merging Delta and Northwest is the most effective way to offset higher fuel prices and improve efficiencies, increase international presence and fund long-term investment in the business.


The transaction is expected to generate more than $1 billion in annual revenue and cost synergies from more effective aircraft utilization, a more comprehensive and diversified route system and cost synergies from reduced overhead and improved operational efficiency. The company expects to incur one-time cash costs to not exceed $1 billion to integrate the two airlines. The combined company will have a stronger, more durable financial base and one of the strongest balance sheets in the industry, with expected liquidity of nearly $7 billion at closing.


Under the terms of the transaction, Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own. This exchange ratio represents a premium to Northwest shareholders of 16.8 percent based on April 14 closing prices. The transaction is expected to be accretive to current Delta shareholders in year one excluding one-time costs. The merger is subject to the approval of Delta and Northwest shareholders and regulatory approvals. It is expected that the regulatory review period will be completed later this year.


Richard Anderson, Delta CEO, stated: “We said we would only enter into a consolidation transaction if it was right for all of our constituencies; Delta and Northwest are a perfect fit. Today, we’re announcing a transaction that is about addition, not subtraction, and combines end-to-end networks that open a world of opportunities for our customers and employees. We believe by partnering with our employees, including providing equity to U.S.-based employees of Delta and Northwest, this combination is off to the right start. Together, we are creating America’s leading airline – an airline that is financially secure, able to invest in our employees and our customers, and built to thrive in an increasingly competitive marketplace.”


Doug Steenland, Northwest CEO, said: “Today’s announcement is exciting for Northwest and its employees. The new carrier will offer superior route diversity across the U.S., Latin America, Europe and Asia and will be better able to overcome the industry’s boom-and-bust cycles. The airline will also be better able to match the right planes with the right routes, making transportation more efficient across our entire network. In short, combining the Northwest and Delta networks will allow the strengthened airline to realize its full global potential and invest in its future.”


Customers, communities to benefit from expanded global route system, more competitive, financially secure airline


The Delta and Northwest merger will offer customers and communities direct service between the United States and the world's major business centers. Specific benefits include:

  • Customers will be able to fly to more destinations, have more schedule options and more opportunities to earn and redeem frequent flyer miles in what will become the world’s largest frequent flyer program.
  • The merged airline will maintain all hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita – each of which will benefit from improved global connectivity.
  • Delta customers will benefit from Northwest’s extensive service to Asian markets and Northwest’s customers will have access to Delta’s strengths across the Caribbean, Latin America, Europe, the Middle East and Africa.
  • Both airlines’ customers will benefit from a strengthened SkyTeam alliance that more closely aligns the combined airline with its respective trans-Atlantic partners Air France and KLM.

Customers also will benefit from the combined carrier’s financial stability. The merger creates one of the strongest balance sheets among major U.S. airlines, permitting the combined airline to invest in its fleet and services to enhance the customer experience. For instance:

  • The combination will accelerate the upgrading of existing international aircraft with lie-flat seats and personal on-demand entertainment.
  • The combined company will have the opportunity to exercise options for delivery of up to 20 widebody jets between 2010 and 2013 to provide more international service than ever before.
  • The combined company also will be able to improve customers’ travel experience through new products and services, including enhanced self-service tools, better bag-tracking technology, new seats and refurbished cabin interiors.

No hub closures; improved international access to benefit small communities


This combination will expand Delta’s international and domestic reach, and there will be no reductions in the number of hubs. In addition, building on both airlines’ proud, decades-long history of serving small communities, Delta will improve worldwide connections to small towns and cities across the U.S., enhancing their access to the global marketplace. Following the merger, Delta will serve more than 140 small communities in the United States – more than any other airline.


“Delta and Northwest are an excellent strategic fit, with complementary and geographically distinct route systems,” said Edward Bastian, Delta president and chief financial officer. “Together, we will have a more robust platform for profitable international growth. Combining both carriers’ international and domestic strengths, with our worldwide SkyTeam partners, we are well positioned to lead the industry and deliver value to our shareholders.”


Merger helps offset record oil prices, creates stronger global airline to compete in Open Skies environment


Record fuel prices have fundamentally changed the economics of the airline industry. Fuel is the highest single expense for Delta and Northwest, significantly eroding the financial benefits of restructuring and placing the airlines’ new found strength and stability at long-term risk. At the beginning of 2007, oil prices were approximately $55 a barrel. Now, oil prices have nearly doubled. This dramatic run-up in the price of oil makes the transaction even more compelling.


Internationally, the two carriers, along with their partners at Air France and KLM, will have a broader global network similar in scope and depth to what other foreign flag carriers already possess – and a significant presence in key business centers, with improved prospects for growing corporate business globally. This presence is essential for U.S. network carriers due to Open Skies agreements that have expanded aviation markets around the world and have created a more competitive international environment.



Merger combines Delta’s strengths in the South, Mountain West, Northeast, Europe and Latin America with Northwest’s leading positions in the Midwest, Canada and Asia; competition will be preserved and enhanced as a result of complementary networks


The Delta-Northwest combination will be pro-competitive. There is little overlap in the nonstop routes the two airlines serve, with direct competitive service on only 12 of more than 1,000 nonstop city pair routes currently flown by both airlines. In fact, the merger will create a stronger, more efficient global competitor. Discount carriers, which now carry one third of domestic passengers, and other network airlines will remain competitors in the airline’s markets.


Delta pilot leadership reaches agreement on post-merger contract


Delta also today announced that it has reached agreement with the company’s pilot leadership to extend its existing collective bargaining agreement through the end of 2012. The agreement, which is subject to pilot ratification, facilitates the realization of the revenue synergies of the combined companies once the transaction is completed. It also provides the Delta pilots a 3.5 percent equity stake in the new company and other enhancements to their current contract.


Delta will use its best efforts to reach a combined Delta-Northwest pilot agreement, including resolution of pilot seniority integration, prior to the closing of the merger.


Employees to be provided seniority protection and equity in the new airline


Frontline employees of both airlines will be provided seniority protection through a fair and equitable seniority integration process, as the airlines are combined. In addition, U.S.-based non-pilot employees of both companies will be provided a 4 percent equity stake in the new airline upon closing. The company also expects no involuntary furloughs of frontline employees as a result of this transaction and the existing pension plans for both companies’ employees will be protected. Additionally, all Delta and Northwest employees will enjoy reciprocal pass privileges on both airlines, beginning as soon as possible during the regulatory review process.


“We are pleased that the people of Delta and Northwest will participate directly in the growth and future success of the combined company,” Anderson said. “Thanks to the hard work and professionalism of the more than 75,000 Delta and Northwest employees over the last few years, our new, combined company will be positioned for a bright future as a leader in the global airline industry.”


Integrated SkyTeam frequent flyer programs and partner networks enable faster integration; existing Air France, KLM joint venture partnerships strengthened


Delta and Northwest’s complementary networks and common membership in the SkyTeam alliance will ease the integration risk that has complicated some airline mergers. The carriers participate in a joint SkyTeam frequent flyer program with common customer lounges and airline partner networks. In addition, they share a common IT platform, which has already been partially integrated through the existing alliance between Delta and Northwest. Further, the combination of Delta and Northwest will enable an accelerated joint venture integration with Air France/KLM, creating the industry’s leading alliance network.


Over the course of the regulatory process, a detailed integration plan will be created by the transition committee made up of leaders from both companies. After closing of the merger, the consolidation of overlapping corporate and administrative functions will result in some job reductions or company-paid transfers. Involuntary reductions for management and administrative employees will be minimized by normal attrition.




Financial advisers to Delta were Greenhill & Co. and Merrill Lynch & Co. and legal advisers were Wachtell, Lipton, Rosen & Katz and Hunton & Williams, LLP. Financial advisers to Northwest were Morgan Stanley and J.P. Morgan Securities and legal advisers were Simpson Thacher & Bartlett LLP and O'Melveny & Myers, LLP.


Investor and Analyst Call Details


There will be a webcast for the investment community on Tuesday, April 15, at 9:00 a.m. EDT. Participants will include Richard Anderson, Delta’s CEO; Doug Steenland, Northwest’s President and CEO; and Ed Bastian, Delta’s President and CFO.


Webcast log-in is available on: www.delta.com/about_delta/investor_relations/webcasts or



A replay of the webcast will be archived for 30 days. Further information is available in the investor relations section of delta.com.


Press Conference Details and Satellite Coordinates


On Tuesday, April 15, at 10:30 a.m. EDT, Delta and Northwest will hold a joint press conference at the Intercontinental, The Barclay, New York, 111 East 48th St, New York, NY 10017.


Participants will include Richard Anderson, Delta’s CEO; Doug Steenland, Northwest’s President and CEO; and Ed Bastian, Delta’s President and CFO.


The press conference will be webcast LIVE over the internet at www.newglobalairline.com. The replay of the webcast will be archived for 30 days.


The press conference will also be available LIVE via satellite through the following feed:

Feed time: 1000-1130 EDT w/15 approx. (test time from 10-10:30 AM)

Coordinates: KU-band: GAL11 / Transponder 15 / Audio 6.2 & 6.8 / Downlink frequency: 12000 (H)


B-Roll Information and Satellite Coordinates


B-roll footage with sound bites from Richard Anderson and Ed Bastian and Delta and Northwest operations will be available via satellite. To access the B-roll feed via satellite, use the coordinates below.


Monday, April 14, 2008

Feed time: 10:00 – 10:30 PM EDT

Coordinates: C-Band: AMC 03 / Transponder 03 / Audio 6.2 & 6.8 / Downlink frequency: 3760 (H)

****This story will be available on the Pathfire DMG****

Under Video News Feeds at Medialink

Story Number: 04NY08-0095

Story Slug: Delta and Northwest Create Global Airline


Tuesday April 15, 2008

Feed time: 4:00-4:30 AM EDT

Coordinates: C-Band: AMC 03 / Transponder 03 / Audio 6.2 & 6.8 / Downlink frequency 3760 (H)


Feed time: 10:00-10:30 AM EDT

Feed time: 1:00 – 1:30 PM EDT

Coordinates: C-Band: GAL 25 (formerly IA 5) / Transponder 19 / Audio 6.2 & 6.8 / Downlink frequency 4080 (V)


Feed time: 2:00-2:30 PM EDT - Includes footage of press conference

Feed time: 7:00-7:30 PM EDT

Coordinates: C-Band: AMC 03 / Transponder 05 / Audio 6.2 & 6.8 / Downlink frequency 3800 (H)


Audio News Release


An audio news release will be available for download on www.newglobalairline.com




Photographs of both companies operations and management teams is available on the news center section of www.newglobalairline.com


Contact Details:


Delta Contacts

Delta Media Relations: 404 715 2554

Delta Investor Relations: 404 715 2170

Brunswick Group: Steve Lipin / Cindy Leggett-Flynn 212 333 3810


Northwest Contacts

Northwest Media Relations: 612 726 2331

Northwest Investor Relations: 800 953 3332


Further details regarding the combination can be found at www.newglobalairline.com


About Delta Air Lines


Delta Air Lines operates service to more worldwide destinations than any airline with Delta and Delta Connection flights to 306 destinations in 58 countries. Delta has added more international capacity than any major U.S. airline during the last two years and is the leader across the Atlantic with flights to 37 trans-Atlantic markets. To Latin America and the Caribbean, Delta offers more than 517 weekly flights to 57 destinations. Delta's marketing alliances also allow customers to earn and redeem SkyMiles on nearly 16,409 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. Including its SkyTeam and worldwide codeshare partners, Delta offers flights to 841 worldwide destinations in 162 countries. Customers can check in for flights, print boarding passes and check flight status at delta.com.


About Northwest Airlines


Northwest Airlines is one of the world’s largest airlines with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world’s most extensive global networks. Northwest and its travel partners serve more than 1,000 cities in excess of 160 countries on six continents. For more information pertaining to Northwest go to the Web site at www.nwa.com.



Forward Looking Statements


This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as “expect,’ “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Delta's and Northwest’s expectations with respect to the synergies, costs and charges and capitalization, anticipated financial impacts of the merger transaction and related transactions; approval of the merger transaction and related transactions by shareholders; the satisfaction of the closing conditions to the merger transaction and related transactions; and the timing of the completion of the merger transaction and related transactions.


These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside our control and difficult to predict. Factors that may cause such differences include, but are not limited to, the possibility that the expected synergies will not be realized, or will not be realized within the expected time period, due to, among other things, (1) the airline pricing environment; (2) competitive actions taken by other airlines; (3) general economic conditions; (4) changes in jet fuel prices; (5) actions taken or conditions imposed by the United States and foreign governments; (6) the willingness of customers to travel; (7) difficulties in integrating the operations of the two airlines; (8) the impact of labor relations, and (9) fluctuations in foreign currency exchange rates. Other factors include the possibility that the merger does not close, including due to the failure to receive required stockholder or regulatory approvals, or the failure of other closing conditions.


Delta cautions that the foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in Delta’s and Northwest’s most recently filed Forms 10-K. All subsequent written and oral forward-looking statements concerning Delta, Northwest, the merger, the related transactions or other matters and attributable to Delta or Northwest or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Delta and Northwest do not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this news release.


Additional Information About the Merger and Where to Find It


In connection with the proposed merger, Delta will file with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of Delta and Northwest that also constitutes a prospectus of Delta. Delta and Northwest will mail the joint proxy statement/prospectus to their stockholders. Delta and Northwest urge investors and security holders to read the joint proxy statement/prospectus regarding the proposed merger when it becomes available because it will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from Delta’s website (www.delta.com) under the tab “About Delta” and then under the heading “Investor Relations” and then under the item “SEC Filings.” You may also obtain these documents, free of charge, from Northwest’s website (www.nwa.com) under the tab “About Northwest” and then under the heading “Investor Relations” and then under the item “SEC Filings and Section 16 Filings.”


Delta, Northwest and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from Delta and Northwest stockholders in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Delta and Northwest stockholders in connection with the proposed merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find information about Delta’s executive officers and directors in its Annual Reports on Form 10-K (including any amendments thereto), Current Reports on Form 8-K and other documents that have previously been filed with the SEC since April 30, 2007 as well as in its definitive proxy statement to be filed with the SEC related to Delta’s 2008 Annual Meeting of Stockholders. You can find information about Northwest’s executive officers and directors in its Annual Reports on Form 10-K (including any amendments thereto), Current Reports on Form 8-K and other documents that have previously been filed with the SEC since May 31, 2007 as well as in its definitive proxy statement to be filed with the SEC related to Northwest’s 2008 Annual Meeting of Stockholders. You can obtain free copies of these documents from Delta and Northwest using the contact information above.







News release from Yahoo:


Delta, Northwest sign off on deal


ATLANTA - A person familiar with the negotiations says Delta Air Lines' and Northwest Airlines' directors have approved a deal for Delta to take over Northwest and create the world's biggest carrier.


The person, who spoke on condition of anonymity because an official announcement was expected later Monday, said the boards of both companies gave the deal the go-ahead.


The announcement will come a year after the two carriers emerged from Chapter 11 bankruptcy protection. Both carriers are losing money again but are in much better shape than the four much-smaller airlines that have filed for bankruptcy or gone out of business in recent weeks.


The deal will need antitrust approval, and integrating the work forces of fully unionized Northwest and Delta, where pilots are currently the only major unionized work group, will be tricky.

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Delta, Northwest To Merge, Create Largest Airline


April 15, 2008

Delta Air Lines and Northwest Airlines said on Monday they have agreed to merge in a deal valued at more than USD$3 billion, aiming to cut costs amid skyrocketing fuel prices and compete better globally.


Under the terms of the proposed deal, which would create the world's largest airline, Delta will acquire Northwest in an all-stock swap in which Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own.


Northwest shareholders will get USD$13.10 per share in Delta stock based on Monday's closing price of USD$11.22 a share, representing a 17 percent premium to Northwest shares' close.


After racking up USD$35 billion in losses and finally emerging from a five-year slump in 2006, US airlines are hoping that mergers could lead to higher fares as combined carriers reduce flights and use their increased market power to raise prices.


The airlines also feel an urgent need to consolidate and cut costs in order to weather high fuel prices, a weak economy and a growing competitive threat from European carriers as trade barriers fall on trans-Atlantic travel.


This merger could also speed up another tie-up -- that of Continental Airlines and United Airlines.


Those two carriers have laid most of the groundwork for a merger, two people briefed on the matter said, and could have a deal ready "pretty quickly" following the Delta and Northwest announcement, one of them said.


The new Delta Air Lines will still be headquartered in Atlanta and operate under Delta's flag, but with over USD$35 billion in annual revenue and about 75,000 employees. Delta Chief Executive Richard Anderson will lead the combined airline.


Delta's pilots would get a 3.5 percent equity stake in the new company while US-based non-pilot employees of both airlines would be given a 4 percent equity stake upon closing of the deal.


"It's a very optimistic view on an industry that's been very dismal for the last couple of weeks," said airline consultant Robert Mann.


The deal will combine Delta's strong Atlanta hub and its trans-Atlantic route network, with Northwest's extensive Asian presence, including a hub in Tokyo. There will be no hub closures, Delta said.


Mann said it would be tricky for Delta to deliver on its promise to retain all hubs. "It would be nice if it were true," he said.


Previous talks stalled in February after pilots' unions at Delta and Northwest failed to agree on how to combine the seniority lists of the two groups.


Delta previously had indicated it would delay merger plans until pilots -- the airline's only major unionized group -- agreed to an integration deal.


But the airlines have decided to go ahead with the merger to create efficiencies that will offset high fuel prices and enable the new carrier to better compete internationally.


Delta and Northwest said the deal promises to generate USD$1 billion in annual revenue and cost synergies.


The Northwest pilots union said in a statement: "This agreement clearly disadvantages NWA pilots both with respect to economic issues and seniority list integration."


"The NWA MEC will use all resources available to aggressively oppose the merger."


Delta, the third-largest US carrier and Northwest, the fifth-largest, still have to get the deal past antitrust authorities, which have scuttled previous airline merger proposals, and overcome objections from pilots' groups and other employee unions.




How Delta And Northwest Stack Up

April 15, 2008

A merger announced on Monday between Delta Air Lines, the No. 3 US carrier, and Northwest Airlines, No. 5, would create the world's largest airline by traffic and could kick-start long-expected consolidation in the US airline industry.


Following are key data for Delta and Northwest, for the full-year 2007.



Headquarters: Atlanta

Hubs: Atlanta, Cincinnati, New York, Salt Lake City

Passenger traffic: 122 billion RPMs

Revenue: USD$19.1 billion

Operating profit: USD$1.1 billion

Net profit: USD$1.6 billion

Employees: 55,044

Fleet: 578 planes, including 90 CRJ-100 regional jets, 133 Boeing 757s and 117 MD-88s.

Major alliances: SkyTeam, which includes Air France-KLM, Northwest and Continental Airlines.

Reach: Delta and Delta Connection flies to 306 destinations in 58 countries. The carrier is especially strong in the eastern United States and on trans-Atlantic routes.



Headquarters: Eagan, Minnesota

Hubs: Detroit, Minneapolis/St. Paul, Memphis

Passenger traffic: 78 billion RPMs

Revenue: USD$12.5 billion

Operating profit: USD$1.1 billion

Net income: USD$2.1 billion

Employees: 31,000

Fleet: 515 aircraft, including Boeing 747s, and 757s, McDonnell-Douglas DC-9s and Airbus A330s, A320s, A319s.

Major alliances: SkyTeam, which includes Delta, Continental, Air France-KLM.

Reach: Northwest is especially strong in the upper Midwest in Minnesota and Michigan. Internationally, Northwest has a very strong presence on Asia/Pacific routes.




On another topic:


IATA, Alitalia In Talks Over Possible Guarantees


April 15, 2008

Airline industry association IATA is in talks with Alitalia about possible guarantees to keep using its settlements system if the Italian flagship were to go into administration, an IATA spokesman said on Monday.


"We have informed Alitalia of the process we would follow should they go into administration," Anthony Concil said. "We would either suspend them from settlement systems or require a security guarantee," he added.


Concil said later the level of the guarantee was not yet under negotiation.


If Alitalia were suspended from IATA's settlements system, it would have to make bilateral agreements with other airlines and travel agents over issues such as ticket sales.


State-owned Alitalia's takeover by Air France-KLM hangs in the balance after unions refused to sign up for the deal, which included job cuts of around 10 percent of the work force.


And the situation was made more uncertain on Monday after opposition leader Silvio Berlusconi won the country's parliamentary election -- ousting the administration that had agreed to the sale.


Berlusconi, who has said he would favor an Italian buyer, said after early results pointed he had won a clear-cut victory in the poll, that he would quickly deal with the Alitalia problem.


Alitalia has said it has funds to last it "in the short term" but loses over EUR1 million euros a day -- a figure likely to have increased given current high fuel prices.


Further state aid is banned by the European Union.


Concil said IATA's move did not indicate any timeframe for developments. "I wouldn't indicate any timeline from sending the letter," he said.




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Italy Refuses Bridge Loan To Alitalia - Source


April 16, 2008

The Italian government has not agreed to grant Alitalia a bridge loan it needs to survive beyond the immediate future and the airline no longer has cash or time on its side, its chairman was quoted as saying by a union source.


Alitalia's management is meeting unions as the carrier and Italy's outgoing government work to revive its deal to be taken over by Air France-KLM that fell apart over union opposition.




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Air France Option Alive After Alitalia Meeting


April 18, 2008

An acquisition by Air France-KLM of Alitalia is one of the options still under consideration following a meeting on Thursday between senior officials from Italy's outgoing and incoming governments, a source from the outgoing government said.


The source said that both Prime Minister Romano Prodi's government and prime minister-elect Silvio Berlusconi were looking for a bipartisan solution to keep Alitalia flying, despite heavy losses.




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This is the end of Alitalia, unless another investors want to put a similar amount of money into the company !!! :blink:


Alitalia Bid No Longer Valid - Air France-KLM


April 22, 2008

Air France-KLM formally withdrew its bid for Alitalia late on Monday, sharply reducing the chances that Europe's biggest airline can be persuaded to buy the Italian flag carrier.


The Franco-Dutch carrier said in a brief statement that Alitalia had asked it to clarify its position after it quit talks with unions over conditions for the takeover that had already been agreed in principle with management.


"Air France-KLM has indicated to Alitalia that the contractual arrangements announced on 14th March with a view to launching a public exchange offer on Alitalia were no longer valid; the conditions precedent that had to be satisfied prior to launching were not fulfilled," it said in a statement in English, French and Italian.


It was not immediately clear if Air France-KLM would consider making a fresh bid, and no further comments were available.


The conditions Air France-KLM had set included getting approval of unions and of a new Italian government. The state owns 49.9 percent of Alitalia.


Silvio Berlusconi, who will become prime minister next month after winning an April 13-14 general election, had said he would not accept the Air France bid in its current form and that he hoped a consortium of Italian investors would come forward instead.


A spokesman for Italy's caretaker prime minister Romano Prodi said he would call a cabinet meeting in the next 48 hours.


The outgoing administration was talking with Berlusconi's team to seek a future for Alitalia, he added.


Earlier in the day sources had said that the cabinet was likely to meet on Tuesday to discuss a bridge loan to keep Alitalia flying while it waits for its fate to be settled.


Air France-KLM had asked the government to extend a EUR300 million euro credit facility to Alitalia to allow it to continue operations. Analysts say it has weeks or a few months at most before it runs out of cash.


The European Union, which has forbidden further state aid to the airline, last week said that it saw no grounds for more aid to the carrier and that any loan must be based on commercial terms.


Speculation has grown in recent days over the type of financing the government may seek to keep Alitalia afloat.


The Corriere della Sera daily said Italian banks may even come up with a EUR1 billion to EUR2 billion recapitalization for the airline to give it a year to find a new partner. Alitalia has said it needs at least EUR750 million by mid-year to keep flying.


Though Berlusconi has pushed the idea of a rival Italian bid and raised the possibility of talks with Russian airline Aeroflot, the French deal had been considered Alitalia's most viable option to avert bankruptcy.


Despite calling the Franco-Dutch bid "humiliating" while on the campaign trail, Berlusconi had softened his stance since winning the election and said it could be acceptable to his government if Alitalia were given "equal dignity" in it.


Intesa Sanpaolo, an Italian bank which had backed a failed bid by smaller airline Air One, hinted that it might be interested under the right conditions.


"At the moment we're out," executive board chairman Enrico Salza was quoted by Ansa news agency as saying on Monday ahead of the Air France-KLM statement.


"But we could be interested in an operation if it's not just about small provincial cabotage... We have not yet examined any new plan but we are ready to do so if asked, with an industrial plan."


Alitalia is considering convening a meeting with its unions on Thursday, a union source said.




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Italian Cabinet OKs Alitalia Bridge Loan


April 23, 2008

The Italian government will give Alitalia a EUR300 million euro (USD$475 million) emergency loan, risking the ire of the European Commission, as it tries to avoid bankruptcy at the airline after Air France-KLM dropped its bid.


Outgoing Prime Minister Romano Prodi said on Tuesday the figure had been requested by his successor, Silvio Berlusconi, in order to have time to sort out alternatives.


With the state-controlled carrier expected to run out of cash in a few months, Italy's incoming and outgoing administrations are heading a rare bipartisan effort to keep the national carrier in the air until a new buyer is found.


Air France-KLM formally withdrew its offer on Monday, dealing a final blow to the deal, which fell apart this month over union opposition.


That gave Berlusconi his first big headache since winning last week's election -- finding a way to funnel cash to the carrier without angering the European Commission, which has threatened court action over any further state aid for Alitalia.


Prodi said his cabinet agreed the EUR300 million bridge loan that must be reimbursed by the end of the year. The loan should allow Alitalia to stave off bankruptcy in the short-term and give it breathing space for a few months.


Business daily Il Sole 24 Ore had said reasons of "public order" would be cited to defend the loan from EU concerns.


A European Commission spokesman said it was too early to comment on the loan and that Brussels needed to study the details first. But the Commission had earlier warned any decision on aid without approval from Brussels first could end up in court.


"We are ready to give a quick green or red light to any loan, but what would be very serious and very damaging would be if Italy decided to go ahead with the loan first and then decide to inform us," an official familiar with the matter said.


"But if Italy takes this road or cannot justify the loan, then make no mistake the Commission will come down very hard and will move as quick as possible."


Italy's economy minister, Tommaso Padoa-Schioppa, said he hoped the European Union would take into account that Italy's next government is confident of finding an alternative to the failed takeover by Air France-KLM.


Also on Tuesday, the European Commission's president said an Italian may soon take over as its next transport commissioner -- a job which would include overseeing the EU executive's dealings with Alitalia.


Commission President Jose Manuel Barroso announced the potential reshuffle in the event that Italy's Franco Frattini quits his post as EU justice and security commissioner to join Berlusconi's cabinet, as expected.


Alitalia shares will return to limited trading on Wednesday, with one price set at the end of the session, after they were suspended on Tuesday pending the government's decision.


Analysts had considered the Franco-Dutch deal Alitalia's most viable option of avoiding bankruptcy, despite speculation of a rival bid.


Berlusconi has talked of a bid by an Italian consortium, but so far none has emerged. He also suggested talks with Russia's Aeroflot after hosting the Russian president last week but the airline -- which dropped out of a previous attempt at selling Alitalia -- has sounded cautious.


"Aeroflot treats with understanding an instruction given by President Vladimir Putin," an Aeroflot spokesman said.


"We are expecting the Italian side to invite us to talks. However, Aeroflot will be guided (in its decision making) ... purely by pragmatic reasons and interests of investors."


Alitalia has convened its unions for a Thursday meeting, a union source said.


Quoting sources at Air France headquarters in Paris, Le Monde said the company had definitively given up on buying Alitalia due to economic rather than political reasons. It cited Alitalia's exposure to high oil costs as a particular concern.


It said Alitalia had not hedged its oil purchases and that the price of aviation fuel had risen almost 35 percent since Air France-KLM drew up its original takeover plan in February.




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Berlusconi Sees Italian Bid For Alitalia In Weeks


April 24, 2008

Italy's prime minister-elect Silvio Berlusconi said on Wednesday an Italian business group plus banks and airlines -- none of whom were named -- would make a bid for Alitalia after a few weeks of due diligence.


But he said a home-grown takeover would still mean "painful" reductions in personnel at the loss-making airline, where trade unions rejected a bid by Air France-KLM because it involved job cuts.


The outgoing government decided late on Tuesday -- in consultation with Berlusconi, who takes office next month -- to give the airline a EUR300 million euro (USD$475 million) emergency loan to keep it flying until a new buyer is found.


That risked angering the European Commission, which in the past has threatened court action and on Wednesday said it would quickly assess whether the loan broke EU state aid rules.


Alitalia bleeds more than a million euros a day and the loan is expected to stave off bankruptcy in the near-term.


"This has given Alitalia the means to survive a few months, time which will be used by a group of Italian entrepreneurs, aided by banks, professionals and airlines, to study Alitalia's accounts," Berlusconi told an Italian radio station.


"After due diligence of three, four or five weeks, this new group will present a binding offer and take over the running of Alitalia, which will involve a painful reduction in personnel," said the 71-year-old media mogul.


He pinned responsibility for the withdrawal this week of Air France-KLM's offer -- which he consistently opposed during the election campaign on the grounds that the flag carrier should stay in Italian hands -- on the "veto by trade unions."


"A company in Alitalia's condition can't keep making a loss; everyone has to show common sense, restructure the company and save as many jobs as possible, while making choices," he said.


"Nobody can guarantee the number of employees will remain at current levels in future," added Berlusconi, who won last week's election by a bigger than expected margin.


The conservative leader has entrusted his close business adviser Bruno Ermolli with the Alitalia dossier, which is likely to be his first major headache as prime minister.


"We are inheriting a problem which it would have been better to leave to the current government, rather than us getting the hot potato," said Berlusconi.


"But I believe it's in the national interest not to lose the flag-carrying airline, not just because of national pride but for valid economic reasons."


His sentiment was echoed by Salvatore Ligresti, who has been named as a potential Alitalia investor. The main shareholder in insurer Fondiara-Sai, Ligresti said giving the airline "a helping hand" was "correct and proper for the country."


Italian diplomats in Brussels explained details of the Alitalia loan to European Commission officials on Wednesday but Brussels had not yet been formally notified of the plan, the Commission's transport spokesman Michele Cercone said.


The Commission denied there would be a conflict of interest if the next transport commissioner -- whose job would include overseeing the EU executive's dealings with Alitalia -- were an Italian, as is likely.


Berlusconi is maneuvering to put Antonio Tajani, a member of the European parliament for his own Forza Italia party, in the post in a reshuffle after Italy's current Justice Commissioner, Franco Frattini, leaves to become Berlusconi's foreign minister.


Alitalia shares closed down 3.3 percent to 0.5995 euros. :blink:


The carrier meets unions on Thursday and will hold a board meeting later that day.


Berlusconi has also suggested talks with Aeroflot after hosting the Russian president last week, but the airline -- which dropped out of an earlier Alitalia bid -- has sounded cautious.




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EU Has Doubts Over Italy's Loan To Alitalia


April 24, 2008

The European Commission said on Thursday it would tell Italy it had doubts over the legality of Rome's plan for an emergency loan to keep struggling airline Alitalia afloat, as rival airlines also voiced opposition.


The Italian government decided on Tuesday to give Alitalia the EUR300 million euro (USD$473 million) loan to keep it flying until a new buyer is found, after Air France-KLM pulled out of a deal this week.


EU rules would prevent Italy from lending Alitalia any money unless Rome took the same approach a private investor would in assessing the risk and setting the interest rate.


"State aid or no state aid -- that is the question," a Commission spokesman told a regular briefing. "If state aid, then it should not be paid out before it is authorized."


Italy is also likely to meet forceful opposition from Alitalia's rival European airlines.


Irish budget carrier Ryanair said the plan was unlawful and it would make a formal complaint to the EU.


"This latest bailout makes a mockery of EU state aid rules," said Ryanair's head of legal affairs, Jim Callaghan. "Propping up an inefficient national airline, which would have gone bankrupt long ago is simply illegal."


A British Airways spokesman said, "We will be watching closely to ensure that EU guidelines on state aid are rigidly adhered to."


Alitalia bleeds more than a million euros a day and the loan is expected to stave off bankruptcy, but the European Commission allows state aid to companies only under strict conditions.


The Commission will contact Italy in the next few days expressing doubts about the loan and asking for clarification, said a spokesman for EU Transport Commissioner Jacques Barrot.


"We have doubts on the nature of the measure and we want to understand if this is a commercial operation as the Italian authorities claim," he said.


Ryanair questioned whether the EU was likely to act, however.


"The Commission has still failed to take any action on Ryanair's three-year-old state aid complaints about Alitalia, Air France, Lufthansa, Olympic and Volare," Callaghan said.




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