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Ryanair opts out of Alitalia cash call

Tuesday, December 03 17:41:11

Ryanair has not offered to take part in Italian airline Alitalia's poorly received 300 million euro capital increase, the chief executive of the Irish budget carrier said today.

After a lukewarm response to its emergency cash call, Alitalia has been left with the prospect of literally running out of fuel before next summer unless it can get top shareholder Air France-KLM or some other investor to invest and help revamp its fleet.

Speaking at a news conference in Rome, Ryanair's CEO Michael O'Leary said if his airline were asked to join Alitalia's cash call currently earmarked only for shareholders "we would evaluate" the possibility.

But the chance of Alitalia letting Ryanair invest in its capital are slim after the carrier last week rebuffed an offer from Ryanair to feed passengers into its long-haul routes and help boost Alitalia's profitability.

Alitalia then said it had its own restructuring plan in place and suggested the two firms were not natural partners.

Cash-strapped Alitalia has so far raised less than two thirds of the capital wanted from the share sale and will rely on Italy's state-owned postal service and other investors to come up with the rest.

Even with a successful cash call, analysts said the airline, which loses around 700,000 euros a day and has net debt of more than 800 million euros, may have to ground its fleet within six months unless a strong investor can be found.

O'Leary said Alitalia could be restructured, but the airline was suffering from too much political meddling, too many strikes and an inadequate fleet.

Today's Alitalia is much leaner than the group that was rescued and privatised in 2008, but a focus on the domestic and regional markets have left the airline vulnerable to competition from low-cost carriers and high-speed trains.

Last month Alitalia's board approved a revised business plan, promising deep cuts to make the airline more competitive.

Alitalia and Italy's government have been hoping that a strong airline such as Lufthansa, Etihad Airways or Russia's Aeroflot would come to its rescue, but all three have said they were not interested in Alitalia right now.

Air France-KLM, already a shareholder with 25 percent, also walked away from the rights offer, asking for much more radical restructuring of Alitalia's debt before it could help.