American private investment firm Cerberus Capital Management got its eye on Italy’s flag carrier Alitalia as it is planning on purchased not only a part of the troubled airline, but the whole company through a bid that would allow it to remain independent.
The US-based buyout group suggested that it is willing to invest funds worth between €100 million ($117.67 million) and €400 million ($470.68 million) to acquire Alitalia.
Cerberus stated that it could make the struggling Italian airline sustainable, competitive and independent by bidding for the whole company.
Sources familiar with the matter said that Cerberus has told Alitalia that it is interested in buying the airline if it could be comprehensively restructured.
Ever since Alitalia filed for bankruptcy for the third time in May, it has been under the control of three government-assigned commissioners, with the government extending the €900 million bridge loan to keep the airline running through September of next year.
The €900 million was a combination of the €600 million loan provided by Rome to Alitalia to maintain its business for about six months with an additional of €300 million.
The airline went into special administration in the same month after its staff rejected a plan to cut jobs as well as salaries as part of a €2 billion rescue plan.
Transport expert and author Andrea Giuricin expressed uncertainty with regards to Alitalia being restructured as he said that the troubled airline might not be easily reorganized, noting the delays and further government handouts, and its negotiating power only weakens as time passes.
Uncertainty Looms over Cerberus’ Plan
Cerberus’ plan will need the Italian government, so as to keep a stake in the airline, while trade unions would benefit through some kind of profit sharing in the Cerberus proposal. The Italian government has so far decided not to retain an equity stake in Alitalia after the sale.
Moreover, the “distressed investing” specialist also offered to involve itself to gain a head start on restructuring Alitalia without any fee, even before making its investment.
An Italian official however said that Cerberus’ plan outside the formal auction process could possibly face uncertainty in Rome, adding that Cerberus’ bid could not be considered unless the formal bidding procedure was cancelled.
Another official stated that the private equity group would have to collaborate with an existing bidder if it wants to join in the sale.
One source said that Cerberus’ move was not only for cherry-picking particular assets or to just acquire planes or specific routes but it is meant to keep the business together as Italy’s national airline.
Germany’s carrier Deutsche Lufthansa AG and UK’s airline easyJet were among the companies cherry-picking certain assets and parts in Alitalia.
Lufthansa said that it was only interested to buy the Italian carrier’s global network traffic and European domestic point-to-point business as it plans to use them to establish a NewAlitalia.
easyJet also stated that it only wants particular assets of a restructured Alitalia, without providing any further details.
Alitalia has postponed its deliberation of the formal bids until April 2018 after certain matters came up in the European airline industry, which concerns Ryanair Ltd., Monarch Airlines, and Air Berlin.
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