30 Aug 2008

Alitalia seeks bankruptcy measure

6:41 am on 30 August 2008

Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival.

The troubled carrier has sought court protection from its creditors, effectively declaring itself insolvent.

An administrator will be appointed to handle the process, with flights continuing while the firm plans a radical overhaul of its operations.

Losing €2 million (£1.6m) a day, Alitalia has survived on a €300m state loan.

Plans are being drawn up to split the carrier into two and to sell a stake in a new entity to a foreign airline.

Earlier on Friday, Corrado Passera, head of the airline's financial advisers Intesa Sanpaolo, confirmed that Alitalia's board was drawing up a request to seek bankruptcy protection.

The move will give the company breathing space to reach agreement on how the business can proceed.

Alitalia has been crippled in recent years by strategic indecision, poor industrial relations and soaring fuel costs. Its shares were suspended earlier this summer and it has delayed the release of its 2007 accounts.