TW741
Topic Author
Posts: 339
Joined: Thu Sep 09, 2004 11:04 pm

Airlines Take Alitalia Complaint To Brussels

Mon Oct 18, 2004 7:21 pm

Eight European airlines including British Airways, Germany's Lufthansa and Iberia of Spain, have attacked the planned rescue of Alitalia, the majority state-owned Italian carrier.


The airlines said in a letter to the European Commission that the restructuring of Alitalia appeared to be planned “to violate or circumvent EC state aid rules”.

Further aid to Alitalia would “severely hinder the much-needed consolidation of the European airline industry” and constituted “a major distortion of competition” said the letter, also been signed by Austrian Airlines, SAS Scandinavian Airlines, Finnair, TAP Air Portugal and Hapag-Lloyd Flug, part of the Tui travel group of Germany.

The Commission should be particularly critical of a rescue aimed at giving further aid to an undertaking in a sector that was suffering from overcapacity, the airlines said.

Alitalia was “aggressively expanding capacity” which was “all the more astonishing” for a company that was suffering from severe overcapacity and was asking for rescue aid.

Alitalia had “launched a range of very aggressive business manoeuvres” in recent months with extremely low fares undercutting the cheapest fares offered by other airlines by more than 50 per cent.

The repeated aid to Alitalia the latest rescue is the third since 1997 was merely shifting its problems on to other “more efficient producers”, they said.

Alitalia last week reported a first-half loss of €620m, almost twice its original estimate. The eight airlines point out in the letter to the Commission that the latest guidelines on state aid applicable from this month say “it would not be justified to keep a firm artificially alive in a sector with long-term structural overcapacity” or when it could “only survive as a result of repeated state interventions”.

The European airlines claim the “clear idea” behind the restructuring proposed for Alitalia was to channel €1.6bn ($2bn) of Alitalia's debts into AZ Service the maintenance and ground operations company that is to be separated from AZ Fly, the flight operations company which would indirectly transfer the debt to the state.

Fintecna, an Italian state-controlled holding company, is supposed to take a 49 per cent stake in AZ Service.

This arrangement would constitute additional state aid of at least €800m, said the airlines, and constituted “an infringement of the condition that further state aid (was) prohibited”.

FT.COM


Previous thread on AZ: http://www.airliners.net/discussions/general_aviation/read.main/1777875/6/

Alitalia is not the only Italian carrier in troubles needing more than just a few Euros. Volare is having a very hard time too - see http://www.airliners.net/discussions/general_aviation/read.main/1782973/

Dove andare l'Italia?

=TW741=

TWA - we showed you how good we have been!
 
jamesvf84
Posts: 129
Joined: Tue Sep 16, 2003 5:18 pm

RE: Airlines Take Alitalia Complaint To Brussels

Mon Oct 18, 2004 9:24 pm

I can understand their position, but don't you think they want AZ out the way.

With the current state of aircraft industry, the slice that the other airlines would be able to carve out of the Italian sector would help them in these dire times!

James
 
BestWestern
Posts: 6998
Joined: Fri Sep 08, 2000 8:46 pm

RE: Airlines Take Alitalia Complaint To Brussels

Mon Oct 18, 2004 9:46 pm

The European airlines claim the “clear idea” behind the restructuring proposed for Alitalia was to channel €1.6bn ($2bn) of Alitalia's debts into AZ Service the maintenance and ground operations company that is to be separated from AZ Fly, the flight operations company which would indirectly transfer the debt to the state.

Fintecna, an Italian state-controlled holding company, is supposed to take a 49 per cent stake in AZ Service.

This arrangement would constitute additional state aid of at least €800m, said the airlines, and constituted “an infringement of the condition that further state aid (was) prohibited”.


That would be like a home owner who cant afford the home loan, splitting the house from the garden - giving the garden the loan, and the giving the garden to their parents... whilst living debt free in the house oblivious to the problems elsewhere, and planning an extension!.... Would your parents allow that for the third time in five years???

Simply astonishing how Alitalia have the nerve to do this, and how the Italian government thinks this above board.

Whilst this goes on Italian aviation will struggle as nobody can compete with a $150 per passenger subsidy to Alitalia from Papa.
You are 100 times more likely to catch a cold on a flight than an average person!
 
Bicoastal
Posts: 2446
Joined: Wed Oct 06, 1999 5:56 am

RE: Airlines Take Alitalia Complaint To Brussels

Mon Oct 18, 2004 10:14 pm

This could be a very cynical move by gutless Italian politicians (gutless and politician are universal, aren't they?). It's a classic case of "good cop, bad cop." The politicians try a scheme that clearly violates the EU rules in order to be good cop to their constituencies. Then the EU can take the heat and be the bad cop when they reject the sham arrangement and force Alitalia to be liquidated. The politicians then say, "we tried, but it was the big bad EU bureaucrats in Brussels that said 'no.'"
Airliners.net has many forums. It has spell check and search functions. Use them before posting!
 
Iberia340600
Posts: 758
Joined: Fri Oct 10, 2003 5:57 am

RE: Airlines Take Alitalia Complaint To Brussels

Tue Oct 19, 2004 1:44 am

BestWestern:

Great analogy with the house/garden similarity!! I hope the EU takes this claim seriously and takes action or further investigation into Alitalia's reasoning for this loan. It is definitely not fair to the other European carriers.
Visca Barça!!
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: Airlines Take Alitalia Complaint To Brussels

Tue Oct 19, 2004 6:28 am

Another post accuses BA of shooting itself by not ordering new aircraft...and what does AZ want to do? Why of course, order new aircraft! Where is the reality with this company or, for the matter, the Italian government, which lets this fantasy continue!
 
BestWestern
Posts: 6998
Joined: Fri Sep 08, 2000 8:46 pm

RE: Airlines Take Alitalia Complaint To Brussels

Tue Oct 19, 2004 6:38 pm

BA is profitable because they ensure income is higher than expenses. Anything they do ensures that this remains.

Meanwhile in Fantasy land... Alitalia last week reported a first-half loss of eur620 million ($775.2 million), almost twice its original forecast..

Good planning in Rome then!

http://www.atwonline.com/

Alitalia submits restructuring plan to EC; rivals protest aid

restructuring appears "to violate or circumvent EC state aid rules" and that further aid to Alitalia would "severely hinder the much-needed consolidation of the European airline industry" and constitute "a major distortion of competition."

The eight airlines point out that the latest guidelines on state aid applicable from this month say "it would not be justified to keep a firm artificially alive in a sector with long-term structural overcapacity" or when it could "only survive as a result of repeated state interventions."
You are 100 times more likely to catch a cold on a flight than an average person!