Alitalia up after rescue talk

ROME - Shares in Alitalia jumped 13 per cent late yesterday on optimism, fuelled by a newspaper report, that the European Commission would sign off on the ailing Italian airline's rescue programme.

The commission said yesterday it was still reviewing what it described as the flag carrier's "sound business plan" and awaiting more information from Italy.

Italian daily la Repubblica said on Saturday that advisers to the European Commission had given the go-ahead for state-owned holding company Fintecna to take a stake in spun-off ground service unit AZ Service, a key part of Alitalia's rescue plan.

It also quoted the European Union's transport commissioner, Jacques Barrot, as saying Alitalia's rescue plan was "exemplary".

Yesterday, Barrot's spokesman said the probe was not over and the use of the word "exemplary" referred to the EU inquiry process - not to Alitalia's restructuring plan.

"We are continuing to examine the issue. We are awaiting some additional information from the Italian authorities," Barrot's spokesman Stefaan De Rynck said.

"We have to look at the legal aspects of what looks a sound business plan."

Alitalia's rivals have demanded that the commission block the restructuring plan, which is being checked for illegal state aid, because it violates EU rules that allow countries to bail out their carriers only once.

An analyst, asked about the stock's rise, warned that the inquiry into Alitalia's restructuring plan could still hit snags.

Alitalia hopes to raise 1.2 billion ($2.21 billion) through a capital increase this year to finance its restructuring and pay off debt.

Italian news agency ANSA said over the weekend that Italy appeared to be making progress in obtaining bank guarantees for the capital increase.

ANSA said Italy hoped to send details of the guarantees to Brussels between April 15 and 19.

- REUTERS