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Quote:
Originally Posted by Lottie23
I know you all might like to make assumptions, but when the government has a 49.9% stake in the underlying company that you're talking about might go bankrupt, didn't you stop and think to yourself......ummmm, if I was a government and owned 49.9% of something, would I let it go down the drain and lose my complete investment?? Or will I do whatever I can, in this case make one phone call and lend alitalia $300M euros, so it can stay afloat through the year end until someone comes in and buys it up and I can cash out and not lose my complete investment.......come on guys!
Because I wouldn't be allowed to. This sort of thing is regulated by the European Union, who can veto an individual government's decisions if the loan is not made on strictly commercial grounds, i.e. on the same terms as a private bank. In other words, if I can't find a private bank who will lend $300m, then I can't lend $300m myself.
Because I wouldn't be allowed to. This sort of thing is regulated by the European Union, who can veto an individual government's decisions if the loan is not made on strictly commercial grounds, i.e. on the same terms as a private bank. In other words, if I can't find a private bank who will lend $300m, then I can't lend $300m myself.
Like I said.....The european union has about as much power as the Queen of England. In other words, none, when it comes to how they've handled individual countries within the EU doing their own thing. So, like I said, no private banks, etc..etc. Just run some cash and hand it over to Alitalia because we own 49.9% of this company and 1) we're not just going to lose our investment over to creditors and 2) it would cause a disgrace and massive job losses and make our economy even crappier than it is right now. Think about it, what will the EU do now that the government actually did give Alitalia the money. NOTHING. That's right. ABSOLUTELY NOTHING, because they know better to get into a specific countries affairs when it should not. The union is still to fragile to take on such issues.....whether people would like to think so or not....
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The Italian government is in a peculiar position. As government, it's not politically saavy to let thousands of people lose their jobs nor is it particularly appealing to lose the "flag carrier". The Swiss did exactly this and out came a better airline (from a financial perspective), but that's not reason enough in the political world to do the same.
As major stakeholder though, why wouldn't they let the company go under? They would likely get the major portion of whatever assets are left. Although I haven't read the financial statements of AZ, I'd be willing to bet that they have more than that 160 million Euros on the asset side of the equation.
So from a financial perspective, the major shareholder can take what's left and run, or they can throw 300 million Euros in the pot and hope like hell that they'll get it back. Pure and simple, this is a bad business decision. But politically it may make some sense.
AZ is a money-losing entity. Short of major restructuring (firing a lot of people for example) it will not turn into a money making operation any time soon. The unions have clearly shown that they would rather be unemployed than do what's necessary to turn the financial situation around. Throwing 300 million Euros at AZ is unlikely to make any real difference. From that perspective then, the major shareholder just increased their loses rather significantly.
At this point I personally think that there's little point for anyone else to try and buy AZ. It makes better business sense to just let it fail on Dec 31 then buy the landing rights at the various airports at bargain prices.
[quote=RCyyz;9620066]The Italian government is in a peculiar position. As government, it's not politically saavy to let thousands of people lose their jobs nor is it particularly appealing to lose the "flag carrier". The Swiss did exactly this and out came a better airline (from a financial perspective), but that's not reason enough in the political world to do the same.
As major stakeholder though, why wouldn't they let the company go under? They would likely get the major portion of whatever assets are left. Although I haven't read the financial statements of AZ, I'd be willing to bet that they have more than that 160 million Euros on the asset side of the equation......
I haven't seem the financials either. However, its highly doubtful that the major stakeholder will get anymoney back. Any at all. This is because lenders, creditors, etc....have first take on any assets the company has when going under.....the common stockholders get the leftovers, which would be zip in this case cause I'm sure Alitalia has a mountain of debt. That's why it is a good business decision on the government's part, and political decision. For example, if the government paid 20M euro to purchase a 49.9% stake in Alitalia way back when, and now sells the 49.9% stake for even 10M euro....that's okay. At least they got some money back, plus they get paid back the $300M euro loan they just gave alitalia.
There are plenties of reasons for another company to come in and buy Alitalia. One major is flight rights....airport space....etc. At the right price, this would be a golden opportunity for another airline to come in (the only thing is now, to shut up the unions and take care of this mess)
Absolutely not true. If a ticket is issued using NW miles it will be on the NW ticket stock. AZ won't get any revenue from NW before it has lifted the "coupons" from the eticket. In a worse case scenario NW just redeposit the miles and credit back the taxes/fees charged.
I tried to change my J class award AZ Dec flight but no other Skyteam member flight was available.
I was told by NW, that IF AZ goes belly up that they would put me on a flight IF IF IF seats were available (meaning award seats)...
Not happy about that as nothing is avail now so who says it will be IF and whenever...
I haven't seem the financials either. However, its highly doubtful that the major stakeholder will get anymoney back. Any at all. This is because lenders, creditors, etc....have first take on any assets the company has when going under.....the common stockholders get the leftovers, which would be zip in this case cause I'm sure Alitalia has a mountain of debt. That's why it is a good business decision on the government's part, and political decision. For example, if the government paid 20M euro to purchase a 49.9% stake in Alitalia way back when, and now sells the 49.9% stake for even 10M euro....that's okay. At least they got some money back, plus they get paid back the $300M euro loan they just gave alitalia.
There are plenties of reasons for another company to come in and buy Alitalia. One major is flight rights....airport space....etc. At the right price, this would be a golden opportunity for another airline to come in (the only thing is now, to shut up the unions and take care of this mess)
$300 million more in debt for AZ is like an overweight drugged out starlet adding another 30lbs to make her more attractive.
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Quote:
Originally Posted by Lottie23
I haven't seem the financials either. However, its highly doubtful that the major stakeholder will get anymoney back. Any at all. This is because lenders, creditors, etc....have first take on any assets the company has when going under.....the common stockholders get the leftovers, which would be zip in this case cause I'm sure Alitalia has a mountain of debt. That's why it is a good business decision on the government's part, and political decision. For example, if the government paid 20M euro to purchase a 49.9% stake in Alitalia way back when, and now sells the 49.9% stake for even 10M euro....that's okay. At least they got some money back, plus they get paid back the $300M euro loan they just gave alitalia.
There are plenties of reasons for another company to come in and buy Alitalia. One major is flight rights....airport space....etc. At the right price, this would be a golden opportunity for another airline to come in (the only thing is now, to shut up the unions and take care of this mess)
The problem is that Alitalia loses EUR 1M per day. It needs cash just to stay afloat. If the Government or anyone lends it any money that is presumably on the basis that it can be restructured as a going concern to return it to profit, otherwise the loan simply couldn't be paid back.
I don't believe it can be restructured as a going concern. Its business model is too flawed; they employ the wrong people from the wrong places in the wrong places. It used to be possible to staff an international airline exclusively with Romans, and it didn't matter that you had to pay extra to fly them all over the place instead of just recruiting people where you wanted them to be in the first place. It also used to be possible to staff an international airline with people who were recruited and retained for reasons other than for their competence. But those days are gone.
IMHO it needs to go under, so it can be divided up, and a buyer found for the good pieces. That's what happened to Swissair and Sabena, and as far as I can tell the new airlines that arose from their respective ashes are doing fine.
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Quote:
Originally Posted by International Herald Tribune
Alitalia doesn't have that much time. Losing some 1 million euros ($1.6 million) a day, the airline has been lurching toward possible bankruptcy protection, which could force it to lay off thousands of employees and eliminate unprofitable routes. Italian reports said in case of bankruptcy protection some 7,000 workers might be laid off.
Like I said. But presumably it needs to do that anyway:
- if the Government lends it EUR 300m with the intention of being paid back, it will have to eliminate unprofitable routes in order to become profitable in order to pay the loan back, or
- otherwise, it will fall into bankruptcy protection/administration, in which case it will have to eliminate unprofitable routes, see above.
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You shouldn't think in market terms...Italian public debt is 1.621 billion euros...or better the 103% of our PIL....which means that 300 million euros more or less...it's just peanuts!
nobody in the govt. think they'll ever get back those money...and nobody cares about it...at least untill the upcoming elections for the Major of Rome later next week...it's funny that this is the only issue that Berlusconi and opposition agreed about in the last 15 years (a part from increasing salaries to deputies)...they both want to take the votes of roman people for giving some more money to alitalia...
if it wouldn't be for my alitalia miles i just would hope that it would get bankrupt and then sold to some foreign company...Italians will never manage to make a profit out of it! politics it's too deep inside of it...
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Quote:
Originally Posted by Luca T.
You shouldn't think in market terms...Italian public debt is 1.621 billion euros...or better the 103% of our PIL....which means that 300 million euros more or less...it's just peanuts!
nobody in the govt. think they'll ever get back those money...and nobody cares about it...
From my (limited?) Canadian perspective, that's just wierd.
But maybe that's one of the reasons I like Italy - it's just different over there!
Like I said. But presumably it needs to do that anyway:
- if the Government lends it EUR 300m with the intention of being paid back, it will have to eliminate unprofitable routes in order to become profitable in order to pay the loan back, or
- otherwise, it will fall into bankruptcy protection/administration, in which case it will have to eliminate unprofitable routes, see above.
Either way, major changes afoot.
I completely agree that the EUR 300M will not be paid back in terms of a set monthly payment and then at the end the whole balance left. But they will get paid back, in terms of when someone does come into buy alitalia, the purchase price for it. They will STILL lose money, that's no doubt, but far less than if bankruptcy was to occur. yes, there will be major changes once the airline is bought. In fact, over a couple years or so, if a foreign airline purchases Alitalia, the name will probably fade out as well and take that of the foreign company. There is no question that it is going down the drain one way or another. In this case, things should be looked at differently as far as the government giving this loan. Just imagine that the government was a billionaire private investor. And this investor saw that Alitalia, in which he owns 50%, was going under. He would logically think to himself, well I am in the whole already pretty deep, but I would rather not lose all of it. I would rather try and give it another "little bitty loan" (when thought of in the big scheme of things) and try and find a buyer in the meantime, so that I can get at least a decent portion of my money back......
That's why the EU should stay out of it, because in fact it is as if an investor is injection this cash. Because, the italian government is truly an investor in Alitalia, the biggest investor in fact......
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You know....about maybe 10-15 years ago, when AF was the 'old' AF that was bleeeding money, France also lent money to it against EU's advice... and now, look at Air France!
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Quote:
Originally Posted by Lottie23
There is no question that it is going down the drain one way or another.
I think that's what most people (particularly those here on FT) think. So why prolong the agony by wasting another 300 million Euros? If it's going to go, let it go!
Last edited by gleff; Apr 24, 08 at 1:47 pm.
Reason: removed reference to deleted post
I think that's what most people (particularly those here on FT) think. So why prolong the agony by wasting another 300 million Euros? If it's going to go, let it go!
I don't think you guys are understanding my point....the point is this is about money. If you had a billions of dollars in a stock. Saw that this stock was about to go Bankrupt because it was running out of CASH. Wouldn't you give it another $300M Euro, ESPECIALLY, MIND YOU A BIG ESPECIALLY, when you knew you had some powerful "friends"/investors that your already in talks with that you knew would come in and buyout the company (as berlosconi does). Of course, you would...because in the end, $300M Euro is really peanuts at this point.....
