Alitalia to lose 1 bln euros in 2008, takeover sealed

By Deepa Babington

ROME (Reuters) - Italian airline Alitalia will lose $1.25 billion in 2008 but a pending takeover by a group of Italian businessmen could revive its fortunes, the administrator overseeing its bankruptcy said as he signed off on the deal.

As final plans to sell Alitalia to the CAI group are wrapped up, administrator Augusto Fantozzi urged more Italians to fly the airline that is canceling more than 100 flights a day due to protests by employees against the deal.

"I often receive expressions of affection for Alitalia by Italians abroad," he told a news conference after approving the takeover. "I wish more Italians here would do the same."

CAI will pay 427 million euros ($534.8 million) in cash and take on debt worth 625 million euros to buy Alitalia's best assets, while the airline's remaining debt and unprofitable units will be taken on by the Italian state, Fantozzi said.

"It's a sale. Believe me, it's not a donation," Fantozzi said, brushing off criticism that the government-backed deal was designed to privatise the carrier's expected future profits while leaving its debts on the shoulders of Italian taxpayers.

The Italian government and the European Commission have already approved the sale, leaving labour protests the only hurdle remaining before CAI. But union anger has shown little sign of halting the deal, and CAI has already began approaching Alitalia workers individually to hire them.

The deal with CAI will close on Nov. 30, Fantozzi said, adding that any issues related to Alitalia will be the investor group's responsibility after that date, even if the official relaunch of the airline is delayed.

CAI, a group of 16 top Italian business names formed after Prime Minister Silvio Berlusconi urged Italian entrepreneurs to save the money-losing carrier, plans to reinvent Alitalia as a smaller, more efficient airline.