Pressure mounts on Italy to save ailing Alitalia

Alitalia, which employs more than 11,000 people, has struggled to compete with low-cost European rivals and was placed in administration in 2017. (Reuters)
Updated 15 April 2019
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Pressure mounts on Italy to save ailing Alitalia

  • Unions warned this weekend that the national carrier risked being ‘euthanized’
  • Alitalia, which employs more than 11,000 people, has struggled to compete with low-cost European rivals

ROME: Concern was mounting in Italy on Monday over the fate of the troubled national airline Alitalia, with just 15 days until the deadline for the state railway company to submit a concrete takeover offer.
Unions warned this weekend that the carrier risked being “euthanized,” spooking Italy’s populist coalition government, which can ill afford a fresh Alitalia disaster as it campaigns for May’s European elections.
Italy’s Ferrovie dello Stato (FS) submitted an offer to buy Alitalia at the end of October, but does not want to hold any more than 30 percent in the airline.
FS had been discussing a potential partnership with both Atlanta-based Delta and EasyJet, Britain’s biggest low-cost airline, but the latter said last month that it was pulling out of the negotiations.
In addition to FS’s 30 percent, Delta is interested in taking 15 percent, and the Italian Treasury another 15 percent, according to Italian media reports.
In that case, one or more partners would still need to be found for the remaining 40 percent. The binding offer must be submitted by April 30.
According to media reports, Delta is in contact with the Chinese company China Eastern, and has also approached Italian infrastructure group Atlantia.
However, any deal with Atlantia would be toxic for the government, which has repeatedly lambasted the company.
Atlantia’s majority-owned subsidiary Autostrade came under fire last summer after a large bridge in Genoa collapsed, killing more than 40 people.
Should the FS bid fail, German airline Lufthansa has expressed interest in Alitalia, but has ruled out any deal that involved the Italian state and would likely cut thousands of jobs.
Three unions for Alitalia pilot and cabin crews — ANPAC, ANPAV and ANP — warned in a statement Saturday that the situation risked deteriorating further with a June 30 deadline for the repayment of a €900 million ($1 billion) state loan.
The unions said they would not sit back and watch the “state euthanasia, and are ready to mobilize and open direct talks with possible industrial and financial partners who would guarantee a credible launch of the new Alitalia.”
The airline, which employs more than 11,000 people, has struggled to compete with low-cost European rivals and was placed in administration in 2017.


Saudi Arabia real estate reform ‘on the right track,’ housing minister tells conference

Updated 47 min 40 sec ago
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Saudi Arabia real estate reform ‘on the right track,’ housing minister tells conference

  • Financial Sector Conference is designed to showcase Saudi Arabia’s finance industry to a world audience
  • The most eye-catching was a plan by the Saudi Real Estate Refinance Company (SRC)

RIYADH: Saudi Arabia’s real estate finance sector — crucial to the ambition of a home-owning economy under the Vision 2030 strategy — is maturing rapidly, a high-profile event in Riyadh heard on Wednesday.
“We’re on the right track,” housing minister Majid Al-Hogail told attendees on the first day of the Financial Sector Conference, designed to showcase Saudi Arabia’s finance industry to a world audience.
His comments came as financial institutions in the Kingdom announced a raft of measures to encourage more home ownership.
The most eye-catching was a plan by the Saudi Real Estate Refinance Company (SRC) — owned by the Public Investment Fund — to issue up to SR3.75 billion ($1 billion) worth of sukuk, or Islamic bonds, this year to finance home ownership plans.
Fabrice Susini, chief executive of the company, said SRC had spent SR1.2 billion buying mortgages from local mortgage finance companies and adding liquidity to these firms. SRC is often compared to US home finance group Fannie Mae.
Reform of the financial infrastructure of the property market is regarded as crucial to Saudi Arabia’s Vision 2030 reform plans, to ensure an ownership rate of 70 percent in the privately owned housing market by 2030.
In a panel entitled “Mortgages: Bolstering Industry Appetite,” Al-Hogail spoke of the unique position Saudi Arabia has in the housing market, highlighting the relevance of a database established by the Ministry of Housing to give a better and deeper understanding of the market. The diverse nature of the market presents its own challenges, he said.
“Every city has its own different set of challenges and we can’t generalize. With the establishment of the database, it provides the ministry with a better future outlook through more detailed information, obtained through various means — whether it were through the Electric Company, through the Ministry of Municipal and Rural Affairs, or through the General Authority for Statistics and their surveys.”
“Over 16 government agencies support the housing sector to achieve Saudi Vision objectives, to increase property ownership among Saudis to 70 percent by 2030,” he said.
An official report for the first quarter of 2019 revealed that the finance market reached SR5.6 billion last March. Some 12,800 citizens received loans, and 85 percent were subsidised.
Saudi Arabia last year announced plans to boost the size of the mortgage market to SR502 billion by 2020 as part of a comprehensive plan to provide housing finance to its citizens, facilitating a balanced and sustainable housing environment through the establishment and development programs.
In other deals, Bidaya Home Finance announced three initiatives to enhance the Saudi market. Its first initiative involved the sale of Bidaya’s mortgage portfolio to SRC, valued at SR500 million over a period of six months. SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview. “Our strategy is clearly to tap the market twice this year,” he said.
“We are really looking at probably issuing something between SR2 to 4 billion that we may be issuing in two tranches.”
He said SRC was looking at sukuk in the 10- to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said. He added that the company was assessing whether it could also issue bonds in currencies other than the Saudi riyal.
In March, SRC completed a SR750 million sukuk issue with multiple tenors, under a program that allows it to issue up to SR11 billion of local currency denominated Islamic bonds.