Italy's latest plan to rescue Alitalia includes seeking bankruptcy protection for its troubled units before resuming the hunt for a foreign partner, a political source said ahead of a crucial week for the stricken airline.
After sputtering through the summer thanks to an emergency loan, Alitalia is expected to admit it has sunk deeper into the red when it reports first-half results next week, when Italy's cabinet is also expected to address the airline's fate.
A list of Italian investors for a reshaped Alitalia stripped of its loss-making units could also be unveiled as early as next week, another source close to the situation said.
Italy is also studying British Airways, former bidder Air France-KLM and Lufthansa as potential partners for an eventual alliance, the source said.
However, British Airways, which has not previously been involved in Alitalia's long-running sale, would not consider a partnership with Alitalia, an industry source said. A BA spokeswoman said it did not comment on market speculation.
Air-France-KLM and Lufthansa had no comment.
"Air France is an international option being studied along with Lufthansa and British Airways," the source close to the situation said on condition of anonymity.
This source added it was not clear whether any of the foreign airlines had been approached to partner Alitalia under the latest plan being put together by adviser Intesa Sanpaolo.
After two failed attempts at finding a foreign alliance for Alitalia, Lufthansa has emerged as the top contender for a stake in a reshaped Alitalia, the government source said. The German carrier has not bid in the Italian government's previous efforts to sell Alitalia but has said the Italian market remains important.
The choice of the previous government -- Air France-KLM -- watched its purchase of Alitalia derailed by union opposition. The French carrier's CEO Jean-Cyril Spinetta said in June the Alitalia dossier was closed as far as it was concerned.
Alitalia shares have been suspended since June, after the government, which owns a controlling 49.9 percent stake, began a third sale attempt following the collapse of the French deal. The airline was worth just under USD$1 billion when its shares were suspended.
Under the plan being drawn up by adviser Intesa Sanpaolo, Alitalia's troubled units will be split off and put under bankruptcy proceedings, while new Italian investors are sought for the rest of the airline, the government source said.
"This way Alitalia will remain in business and the government can present the new company to an Italian consortium, probably as early as next week and then a (foreign) partner will be sought," the government source said.
The process will mean the Italian government has to modify the existing bankruptcy law, which was also used to salvage Parmalat. The dairy group collapsed under EUR14 billion euros of debt in 2003, but was relisted on the Milan bourse in 2005.
Analysts, however, say that Alitalia's problems could run deeper than those of debt-laden companies like Parmalat.
The airline has posted a profit only four times in 15 years, is riddled with inefficiencies and strikes and has steadily lost market share due to stiff competition from low-cost carriers.
High fuel prices have also torn a hole through its accounts, and the airline is expected to yet again issue a fresh plea for new funds when it reports results on Friday.
