scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

AZ: Unfair Subsidies Or Business As Usual?

Wed Apr 06, 2005 6:22 pm

As of this weekend, reports out of Italy are that the EU Commission is leaning toward approving AZ's restructuring plan. Plan calls for the company to be split in two, AZFly and AZService. They are awaiting guarantees from banks that the recapitalization will have no government backing.

AZService would be sold off to Fintecna (wholly owned by the Italian government) for $282M. (If that's not a subsidy, I don't know what is).

AZ got approval from the EU Commission last year for a $513M "loan" from the Italian government, to be repaid within one year and for the government to reduce their stake in the carrier from 62% now, to below 50%.

AZ started drawing on the "loan" in January. BA & LH have complained to the EU Commission that AZ has used this money to reduce fares and expand services in Eastern Europe, something which is was not meant for. Accordingly, as they have already appointed Ernst&Young to look into possible "illegal" state aid in the recapitalization plan, they have also asked them to look into the allegations of unfair pricing.

Yesterday, the Italian treasury called on AZ to seek an "industrial partner", a move that raises expectations of a tie-up with AF/KLM (What's new?).

Cimoli, AZ CEO, is pressing AF/KLM to issue lettes of intent to purchase shares in AZ when the Italian government reduces its stake. AF/KLM spokesperson denied that the group was looking to purchase shares in AZ.

My gut feeling is that the EU Commission will approve this plan come hell or high water, because there are too much politics involved. Both Chiraq and Berlusconi have stated they want to see a merged AF/KLM & AZ, and what they want they usually get.

There are a lot of discussions on these forums on A vs B, subsidies this, subsidies that. I think this is exactly the same, and should be given the contempt it deserves.
 
cornish
Posts: 7651
Joined: Fri Feb 18, 2005 8:05 pm

RE: AZ: Unfair Subsidies Or Business As Usual?

Wed Apr 06, 2005 6:27 pm

Surprise, surprise......

The other airlines will be up in arms but nothing will happen. It does make a mockery of the supposed "free market" in Europe when AZ continually gets major handouts.

The joke is that none of these handouts have made any difference whatsoever and nothing seems to have changed over the years as a result of them.

It is still woefully overmanned, suffers from seemingly weekly strikes, has a poor route network, etc etc.

I suspect there are some VERY corrupt goings on behind the scenes at AZ and the Italian govt. This really shouldn't be allowed to happen ,but as said - it will get pushed through by Berlo and Chriac no doubt.
Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
 
UN_B732
Posts: 3529
Joined: Wed Jul 04, 2001 12:57 am

RE: AZ: Unfair Subsidies Or Business As Usual?

Wed Apr 06, 2005 7:07 pm

Yeah, Berlo's such a big mafia man.
Has anyone notice how AZ's transit fares tend to be lower than everyone else (KL, AF, BA?)
What now?
 
Andreas
Posts: 5880
Joined: Tue Oct 09, 2001 7:56 pm

RE: AZ: Unfair Subsidies Or Business As Usual?

Wed Apr 06, 2005 9:52 pm

Quoting Scotron11 (Thread starter):
BA & LH have complained to the EU Commission that AZ has used this money to reduce fares

Well, AZ did not invent this...AF did it during the early 90ies BIG TIME, and guess who complained BIG TIME? You've got it: BA and LH!

So, the thread starter is not quite correct: It's Unfair Subsidies AND Business as Usual!
I know it's only VfB but I like it!
 
scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

RE: AZ: Unfair Subsidies Or Business As Usual?

Thu Apr 07, 2005 12:43 am

Quoting Andreas (Reply 3):

Well, AZ did not invent this...AF did it during the early 90ies BIG TIME, and guess who complained BIG TIME? You've got it: BA and LH!

I remember reading about that. Although the EU courts sided with BA & LH, the EU Commission ruled on a technicality that AF could keep the so-called "loans".

For that reason I think the EU Commission will let it through. Then the whole bunch can go and play happy airlines together.
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: AZ: Unfair Subsidies Or Business As Usual?

Thu Apr 07, 2005 3:16 am

Quoting Scotron11 (Thread starter):
Unfair Subsidies Or Business As Usual?

Actually, it would be altogether correct to give "both" as the answer to this 2-part question.

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