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Italy trying to keep Alitalia in the air

Marketplace Staff Apr 23, 2008


Renita Jablonski: An Italian airline has different problems. The outgoing administration in Rome has agreed to a $475 million emergency loan to keep Alitalia flying. Stephen Beard has more.

Stephen Beard: Alitalia has been a basket case and a political football for years. A takeover bid by Air France fell apart during the recent election campaign. Now, the incoming government and the old administration have patched up their differences. They’ve hastily agreed to save Alitalia from imminent collapse. The airline will get a loan of almost half a billion dollars to tide it over. But Alitalia is running out of options. Inefficient and overstaffed, it’s losing a million dollars a day. And, says analyst Howard Wheeldon, the ever-rising price of fuel is a further burden.

Howard Wheeldon: The cost increase of oil is going to hit it even further. Profitability, if it was ever to come, has been moved, potentially, years away.

He says the European Commission will almost certainly investigate Alitalia’s emergency loan. The Commission is cracking down on state aid for the aviation industry.

In London, this is Stephen Beard for Marketplace.

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