Without Injection Alitalia Could Run Short of Cash

It is probable that Alitalia may run short on cash following the end of this year if they go without a funds injection, according to analysts from Citigroup, who predict that the troubled carrier could spend 550 million euros in cash during the year. Alitalia has been on track to wipe out their cash into the 3rd quarter, however, they were given some room to breath by an emergency loan from the government, says analysts in a note. Citigroup said that the Italian government’s 300 million euro loan, which is being investigated by the European Commission, should help the airline survive until the end of the year, but it may not be efficient enough to help them any during 2009.

The Italian government, which is the owner of 49.9% of Alitalia’s shares, is working on their 3rd attempt at saving the carrier following the unsuccessful planned sale with Air France KLM. Citigroup said that a merger with a smaller Italian airline, such as Air One, seems to be their only solution now, along with grounding the aircrafts that have become obsolete, which will cut their capacity in half. They predicted that the airline would need an equity injection of 1 billion euros in order to continue operating. The bank has illustrated a rigid picture of the financial prospects for Alitalia, forecasting that they will have a 720 million euro net loss, as well as substantial write-downs for their aging fleet, this year. Citigroup also anticipates that Alitalia will report a 20% fall in revenues when they announce their 2nd quarter results in August, which will be driven by their 23% drop in traffic and cutbacks in Milan.

Find out more by visiting: www.alitalia.com