Italy said to mull Alitalia financing to avoid cash crunch

Italy is considering emergency financing for Alitalia SpA as the carrier risks running out of cash in a few weeks because investors and creditors are reluctant to fund a new rescue plan without a labor agreement on job cuts, according to people familiar with the matter. The Finance Ministry is pressing state-owned lender Cassa Depositi e Prestiti to provide E200m of financing backed by a state guarantee as part of E400m of so-called contingency equity, said the people, who asked not be be identified because the discussions are private. Etihad Airways, which owns 49% of Alitalia, is ready to invest the remaining E200m, the people said. The money would be used to keep the airline afloat if the five-year restructuring plan announced March 15 fails to get backing from remaining investors or the company fails to reach its financial targets. Finance Minister Pier Carlo Padoan, in an effort to meet EU rules on state aid, may use a 2003 Italian law that allows state guarantees to be used for Cassa Depositi financing, the people said. The Italian government and CDP are still evaluating the mechanism and no final decision has been taken, they said. Time is running short for the Rome-based company, which went bankrupt in 2008 after rescue attempts involving the state and private investors failed. Etihad bought its stake in 2014, but its turnaround strategy so far hasn’t generated earnings. Liquidity may only last until mid-April without emergency funding, la Repubblica reported Feb. 26. The government-backed financing would be a last-resort cash buffer, the people said.<br/>