Italian investor group CAI formally takes over Alitalia

The Italian Air Company (CAI), the Italy-based consortium of investors, has formally taken over Alitalia, the flag-carrier airline of Italy.

CAI, made up of a consortium of Italian industry leaders, has agreed to pay 1.052 billion euros ($1.4 billion) for the troubled Alitalia’s passenger operations.

The Italian Air Company will retain 12,500 employees of Alitalia, but will cut about 3,250 jobs.

CAI also finalised the purchase of Air One, Italy’s number two airline, whose operations will be merged with those of the new Alitalia.

Roberto Colaninno, chairman of CAI, told a news conference in Rome: “The new Alitalia will cede a stake of between 20% and 25% to a foreign partner –either Air France-KLM or Lufthansa of Germany – to be selected by the end of 2008.”

Alitalia, headquartered in Rome, Italy, has its hub at Leonardo da Vinci Airport, Rome. Malpensa International Airport in Milan was one of Alitalia’s hubs, but later Malpensa was downgraded to a focus city with the transition completed by April 2008, leaving Rome as Alitalia’s only hub.

At the news conference, Rocco Sabelli, chief executive officer of CAI and who will be the operational chief of the new Alitalia, said: “CAI is more interested in a major commitment involving a foreign stakeholder. We will select the best proposal, while also keeping in mind the timeline which should not be too long.”

The choice of the foreign stakeholder will be submitted for approval to the 21 Italian stakeholders of CAI.

Sabelli said CAI had also received a proposal for a commercial tie-up with British Airways.

Reports in the Italian media have suggested that Air France-KLM, the airline holding company incorporated under French law with its headquarters at Roissy-Charles de Gaulle Airport near Paris, France, is the frontrunner. However, Lufthansa, the flag carrier of Germany, enjoys support from Italy’s Prime Minister Silvio Berlusconi and his political allies in the Northern League.

It may be noted that, before winning general elections in April 2008, Silvio Berlusconi had opposed an offer for the Italian government’s 49.9% stake from Air France, saying that he wanted Alitalia to remain in Italian hands. (Berlusconi won the general elections in coalition with the regional Northern League party, which is lobbying for Alitalia to enter into partnership with Lufthansa.)

“The re-launched Alitalia – which will, ideally, begin operations on January 12 or 13, 2009 – will operate 670 flights a day in 2009, with a fleet worth about 3.3 billion euros,” Rocco Sabelli said.

Under CAI’s five-year business plan, Sabelli added, the airline would return to profitability in 2010. “The five-year business plan forecasts 520 million euros of investments outside of aircraft, a fleet worth 4.2 billion euros by 2013, and a turnover of 4.8 billion euros by that year.”

The old Alitalia had a total debt of around 3.2 billion euros.

CAI’s purchase of Alitalia was initially set to be finalised by the end of November 2008, but had been delayed.