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January 22, 2008

Political Instability Sinks Alitalia – stock price down 9.7%

The political situation is quite edgy at the moment in Italy. Fears of possible government collapsement caused Alitalia’s stock price to fall to 63.25 cents, a dramatic further 9.7 percent fall.

Trading of Alitalia’s stocks had to be repeatedly suspended because of extended losses. The fears of many materialized, when Prime Minister Romano Prodi announced today that he is prepared to submit his resignation letter if the allies do not support him in a confidence vote.

Alitalia was put up for sale under Prodi’s administration after repeatedly trying to turn profitable a company that loses more than… 1 million euros every day. The government tried to get rid of Alitalia in the summer, putting the failing company on auction, but with no suitors left in the game, they dropped the idea. In August, the government’s only option was to give Alitalia’s chairman Maurizio Prato to find a buyer.

Air France-KLM had offered to buy the state’s 49.9% of Alitalia for 486 million euros. A real bargain that would be for the Franco-Dutch company, given the carriers’s then-market-value.

Further information on the deal, the government’s role, and Air France-KLM’s terms and conditions

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