European airlines raise concerns over Alitalia
By Kevin Done, Aerospace Correspondent
Published: May 23 2004 19:21 | Last Updated: May 23 2004 19:21
European airlines are expressing renewed concern to the European Commission
about Alitalia, the struggling Italian flag carrier, receiving state aid from
the Italian government.
Rod Eddington, chief executive of British Airways, has written to Loyola de
Palacio, the European transport commissioner, expressing the fear that "some
sort of illegal state assistance will be used to resolve Alitalia's problems."
It was very difficult to unravel the effects of the aid, after it had been
provided," he said.
"I remain very worried about the effects that state aid has on the structure
of, and competition within, the European airline industry and continue to
look to you to ensure that the rules are applied vigorously and in a timely
fashion," said Mr Eddington.
Last week Deloitte and Touche, the Alitalia auditors, refused to approve the
Alitalia accounts for 2003 in the face of the heavy operating losses suffered
for the past two years and the continuing losses this year.
Deloitte said it said it lacked the necessary information "to judge the
correctness of the principles applied" in preparation of the accounts.
Alitalia, which has been teetering on the edge of bankruptcy, said last week
that the government was preparing "without delay" to provide state
guarantees, that would make it possible to obtain a bridging loan.
The Ministry of Economy and Finance would also consider taking part in a
planned equity increase, together with private investors, it said, to ensure
that the operation complied with EU state aid regulations.
The broad outlines of the latest Alitalia rescue plan envisage the flight
operations and ground operations being split into separate units.
According to Alitalia, which is 62 per cent owned by the Italian state,
Fintecna, a government development agency, is ready to take a majority stake,
together with other private investors and public bodies in the new Alitalia,
that is supposed to emerge from the latest restructuring.
In his letter to Ms de Palacio, Mr Eddington said "it appears that the
airline will be split into two parts...There is a danger of loading all the
debt and problems into one part of the business and leaving the airline
operations unencumbered. That would be very unfair to other airlines."