Italy's Alitalia is still chalking up losses, but it registered a positive cash flow in April for the first time in months and its flight unit might return to profit in 2006, company officials have said.
The airline, which got the go-ahead from the European Union earlier for a crucial restructuring plan, lost 812 million euros ($999 million) last year and recorded an operating loss of 120 million euros in the first quarter of 2005.
Asked how the company was faring in the second quarter, Chief Executive Giancarlo Cimoli told reporters: "More or less like the first quarter."
He added that the state-controlled airline needed to make one final push to sort out its financial problems.
"We face another year of projects that have to be completed, but that have already been started, in order to balance our books or even achieve a profit," Cimoli told a news conference.
"We are aiming for a profit in 2006," he added.
Finance director Gabriele Spazzadeschi later clarified that the company hoped its flight operations, grouped in AZ Fly, would return to profit next year after chalking up a loss in 2005. He did not say what the forecasts were for the ground unit.
Capital increase
As part of Alitalia's do-or-die restructuring, the airline has split into two parts, AZ Fly and AZ Services, which handle air and ground operations respectively.
AZ Fly will benefit from a planned capital increase of up to 1.2 billion euros, which Cimoli said would take place by the end of October. He said the final amount of money involved in the cash call would be decided after further consultations with financial advisers.
"I think the operation can be concluded within October, the period within which the Italian government is working to bring down (its stake in Alitalia) to below 50 percent," Cimoli said.
The Italian Treasury owns 62.4 percent of Alitalia, but has told Brussels it would reduce it majority stake to below half.
When asked why private investors would want to participate in the capital increase, Cimoli urged that they examine progress the airline has made in the past year and improvements in labour relations, including an agreement to shed thousands of jobs.
Looking to the future, Cimoli said Alitalia was still interested in hooking up with Air France KLM, but added that he would not rule out any possible alliances or make any hasty arrangements.
"Given the situation, we are ready to talk to everyone. We have not committed ourselves to any accord," he said.
When asked about timing, Cimoli said: "We don't want to wait two or three years (to forge an alliance) but it's not an immediate problem."
Air France holds about two percent of Alitalia. However, the French have said the Italian airline will have to be privatised and show solid evidence of improvement in its finances before Air France would consider deepening its ties.
By: N. Peter Kramer
