ROME, Jan. 15 (Xinhua) -- Alitalia, Italy's beleaguered national air carrier, has been continuing its long hunt for a suitor with major airlines in both the United States and Germany the latest as front runners.

Alitalia has been in decline for years, racking up at least 3.3 billion euros (3.8 billion U.S. dollars) in debt and staying afloat on the back of hundreds of millions of euros in state loans. The company's flight network has been reduced by half over the last decade.

For nearly two years Alitalia has negotiated with possible partnerships that included discount carriers EasyJet and Ryanair -- both of which have in recent years surpassed Alitalia in terms of domestic air traffic passenger numbers.

A deal involving U.S.-based Delta represents the newest chapter in the Italian airline saga. Earlier this month, Italian officials traveled to Delta headquarters in Atlanta to discuss a possible partnership.

The deal with Delta may hinge on the role of Ferrovie dello Stato, Italy's national railroad. Ferrovie dello Stato has been a competitor to Alitalia, as increasing speed on trains and more frequent services helped erode what had previously been profitable domestic air routes, such as between cities on the Rome-Florence-Bologna-Milan-Turin corridor.

Now, Ferrovie dello Stato could emerge as a main "anchor" investor in a deal with Delta, with the U.S. company helping run long-haul flights. Such a deal would help Delta's growth prospects beyond a full mature market in the United States.

The Ferrovie dello Stato's draft plan to save Alitalia is set to be released on Jan. 31.

"If the final deal takes place with Ferrovie dello Stato in a major role then Alitalia is back where it started: with a state role in what should be a private company," Carlo Valdes, an economist with the Observatory on Italian Public Accounts, an academic group focusing on transparency and spending issues, told Xinhua. "Alitalia's troubles trace back to the company's inability to be competitive as a private company."

German national carrier Lufthansa is the other front runner for a collaboration deal with Alitalia, according to media reports. Lufthansa has absorbed struggling regional carriers in the past --Swiss Air is the best example -- and has helped nurse them back to health while expending the company's reach.

But whether Alitalia ends up partnered with Delta, Lufthansa, or another company, the company will face cutbacks and a far lower profile, according to Andrea Giuricin, from the University Milan Bicocca's CESISP program, a leading economic research center.

"Any partner is going to want to focus on the valuable parts of the company, like routes in and to a major tourist destination like Italy and its fleet," Giuricin said in an interview. "No company goes into a potential deal eager to take on billions in debt."

Giuricin said it will not be clear what would happen to the company's weak balance sheet until a deal is closed. It is possible the cash-strapped Italian Treasury will assume at least part of that sum. Enditem

Related

Go to Forum >>0 Comment(s)