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Wednesday December 31, 2008

Italy's Alitalia takes over Air One

Alitalia on Wednesday completed the takeover of its smaller competitor Air One as part of a plan to relaunch Italy's bankrupt national carrier.

Air One, Italy's No. 2 airline, said in a statement it had closed the deal with the group of Italian investors that has acquired the bulk of Alitalia's profitable assets to create a single, streamlined carrier.

The investors, which include Air One chief Carlo Toto, are scheduled to officially take over operations at Alitalia on Jan. 13.

Air One said in a statement that Toto would reinvest euro60 million ($84.5 million) in the new Alitalia. It did not disclose the total amount paid in the deal.

The investors, led by scooter-maker Piaggio CEO Roberto Colaninno, agreed to a euro1.052 billion ($1.4 billion) deal to relaunch Alitalia some two years after the government started the long and difficult process of unloading its 49.9 percent stake in the unprofitable carrier.

Alitalia never halted flying, but the new airline will have fewer routes and aircraft, as well as employing 12,500 employees rather than the current 20,000.

The new Alitalia is also looking for a foreign investor to take a 20 percent to 25 percent stake, with Air France-KLM and Germany's Lufthansa the most probable candidates.

Italian media have been reporting over the last weeks that Air France-KLM is close to a deal. Both Alitalia and Air France have declined to comment.