Alitalia deal worth 1 billion euros

A group of investors seeking to buy parts of bankrupt airline Alitalia would take on debts and make cash payments for a total of euro1 billion euros ($1.29 billion) in return for taking ownership, the carrier said.

CAI, the consortium of Italian investors set up to salvage the carrier, will take on more than 625 million euros ($800 million) of Alitalia's debt — about half of what the company owes.

The rest of the deal will be settled in cash, with a first installment of 100 million euros ($129 million) to be paid on the day the agreement is signed, Alitalia said in a statement issued late Wednesday. CAI's binding offer, which was presented last month, is valid until Nov. 30.

Alitalia said that under the deal CAI would buy 64 of its aircraft and acquire the leasing contracts for another 29. Alitalia has a fleet of 173 planes.

The new carrier would also be paying for the old Alitalia's landing and takeoff rights as well as its trademarks.

Buffeted by high oil prices, competition from low-cost airlines and labor unrest, the state-controlled carrier declared bankruptcy in August.

Previous efforts by the government to sell its 49.9 percent stake in the carrier have failed, and Premier Silvio Berlusconi has been pushing for a deal with CAI after pledging to keep the company in Italian hands.

The group of investors led by Roberto Colaninno, the chairman of scooter-maker Piaggio, plans to create a scaled-down and leaner airline, stripping off Alitalia's unprofitable assets and combining it with Italy's No. 2 carrier, the much smaller Air One.

The investors have also been seeking an international carrier, possibly Air France-KLM or Lufthansa, to take a minority share in the new Alitalia.

The plan is facing opposition by some unions and contract negotiations between CAI and groups representing pilots and flight attendants have broken down. However, Colaninno has said that the deal would go ahead even without the unions and that the new carrier could hire pilots from other companies.

The deal must also be cleared by the European Union and antitrust regulators. Alitalia said its government-appointed administrator would present the plan to regulators next week.

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