Air France said to consider bail-out of Alitalia

18th August 2006, Comments 0 comments

MILAN, Aug 18, 2006 (AFP) - The price of shares in Italian airline Alitalia rose by more than five percent on Friday after a press report in a French newspaper suggested Air France-KLM was preparing to bail out the troubled Italian group.

MILAN, Aug 18, 2006 (AFP) - The price of shares in Italian airline Alitalia rose by more than five percent on Friday after a press report in a French newspaper suggested Air France-KLM was preparing to bail out the troubled Italian group.

According to the Le Parisien newspaper, the French government is considering proposing a deal under which Air France-KLM would help save Alitalia in return for a pledge that Italian energy group Enel would drop its ambitions concerning French group Suez.

Enel has expressed its desire to buy Suez, a French energy utility with interests in electricity and water, but the centre-right French government is staunchly opposed to such a move.

In midday trading on the Milan stock exchange, shares in Alitalia showed a gain of 5.39 percent to EUR 0.94. In Paris, shares in Air France were up 0.60 percent to EUR 20.18.

"This would mean salvation for Alitalia," one Italy-based dealer said, referring to the troubled state of the Italian flag carrier.

It escaped bankruptcy in 2004 only with the help of a state-backed rescue plan and has since faced crippling industrial action from workers protesting its restructuring efforts.

The paper, however, did not name its source or give any details on how a rescue move from Air France would work.

Neither Alitalia nor Air France would comment on the report.

In June, Air France-KLM chief executive Jean-Cyril Spinetta had said that a merger with Alitalia was the "ultimate goal" of a cooperation agreement signed by the two airlines in 2001, but that closer ties were not an immediate priority.

Copyright AFP

Subject: French news

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