=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2009/01/12/financial/= f053038S23.DTL --------------------------------------------------------------------- Monday, January 12, 2009 (AP) Alitalia chooses Air France as partner By COLLEEN BARRY and ARIEL DAVID, Associated Press Writers (01-12) 13:35 PST ROME, Italy (AP) -- Alitalia, whose 62 years as a state-run company ended in bankruptcy, begins its new incarnation Tuesday as a private company with Air France-KLM as a minority shareholder alongside a varied group of Italian investors. The Franco-Dutch carrier, which withdrew a failed bid last year to buy t= he airline outright, will pay euro322 million (US$431.29 million) in cash and equity for a 25 percent share in the new company, Alitalia's new CEO Rocco Sabelli said at a news conference Monday after investors approved the deal at a board meeting. Sabelli said Air France had a clear advantage in the bidding process because of its long-standing partnership in the Sky Team alliance and its earlier bid. "The interest in the Italian market by the other bidders, including Lufthansa, did not translate into a real offer," Sabelli said. The group of some 25 Italian investors — including the chiefs of scooter maker Piaggio, the Pirelli tire company and a highway construction company — bought the bankrupt airline from the Italian government in a euro1.052 billion (US$1.41 billion) deal. That includes euro625 million in Alitalia's debt, which in the meantime has ballooned to at least euro3.2 billion. Roberto Colaninno, president of the so-called CAI investor group, said t= he Air France partnership will bring synergies of euro720 million (US$964.37 million) over the first three years. However, rules will prevent Air France from expanding its participation for the first four years. The deal requires regulatory approval. "If Air France dreams of buying all of Alitalia, it is their dream. We have a different dream," Colaninno told reporters. In a statement, Air France-KLM said the partnership was an "important milestone" in securing its future as the industry faces tough economic challenges. The new Alitalia — which merge the old Alitalia's profitable assets with the much smaller Air One — launches on Tuesday with a 6 a.m. (0600 GMT and 1 a.m. EST) flight from London's Heathrow to Rome. It is slimmer than its predecessor, with 148 aircraft from both airlines combined, compared with 173 in the old fleet, and about 12,500 employees, down from more than 23,500 between the two airlines. There will be nothing manifestly different about the new Alitalia. The logo remains the same, as do the green flight crew uniforms. The fleet will be newer after the incoming owners declined to take on older, less-efficient planes, and the flight plan is streamlined to serve 70 destinations, just 13 of those intercontinental. Airline analyst Diogenis Papiomytis at Frost & Sullivan said the new airline creates a domestic monopoly that "is a benefit in this economic crisis that we have now." "I think it is going to be a much better airline ... At least at the beginning, it will be mainly an Italian/European airline. It is not a global airline by any means. It cannot compete against Lufthansa, British Airways, Air France, even Iberia. At this point, it takes tier two status. But tier-two status is better than bankrupt," Papiomytis said. But not everyone is welcoming the deal. Workers held a mock funeral for Alitalia, and unions unhappy with the hiring regime have pledged to mar the launch with protests Tuesday. Sabelli said he didn't expect major protests by workers employed by the new Alitalia, but feared some anger by those who had been fired. The new airline has arranged for back-up pilots, baggage handlers and technicians to be available in case the protests prevent staff from reaching their jobs, he said. "I don't expect a perfect takeoff," he told The Associated Press in an exclusive interview. "This is an irresistible temptation for those who still have gripes with Alitalia." Italy's civil aviation authority ENAC marked the passage from the old Alitalia to the new with a signing ceremony Monday evening. Its inspectors will spend the night approving for operation the 93 planes Alitalia is taking over. The remaining aircraft are among the assets that the bankruptcy administrator Augusto Fantozzi is charged with selling off. While Fantozzi said this fall that there had been bidders, deals were still being finalized. ___ Colleen Barry reported from Milan. -------------------------------------= --------------------------------- Copyright 2009 AP <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".