Alitalia FY net loss to narrow to around 400 mln eur; focus on govt sale


Milan (Thomson Financial) - Alitalia SpA's full year results, due Wednesday, will show net loss narrowing to around 400 mln eur, from 626 mln in 2006, when results included a 197 mln fleet write-down, analysts said, adding their focus is privatisation.

Only two analysts provided estimates, with Deutsche Bank seeing a net loss of 411 mln eur after a 54 mln gain on London, Heathrow slot sales, and JP Morgan predicting a net loss of 425 mln, without the gain.

"We forecast net losses including exceptional gains of 411 mln eur," Deutsche Bank said in a note last week.

"We estimated third quarter yields fell 4.7 pct but we think that fourth quarter yield declines are unlikely to reach these levels," Deutsche Bank said.

Yields measure average revenue per passenger per kilometre travelled.

On slot sales, Alitalia said end-December it was earning fees of 92 mln eur from the slot deal at Heathrow, adding it intends to book 54 mln in 2007.

Analysts said there is not enough visibility on Alitalia activities to say how its plans to cutback operations at Milan's Malpensa airport will improve its results in 2008.

Deutsche Bank said: "We believe the equity market is ignoring any figures on current trading and focusing on the proposed sale of the company."

Italy's government has chosen Air France-KLM for exclusive talks on buying the state's 49.9 pct stake in Alitalia, though Italy's Air One is challenging this decision and wants to make its own bid.

North Italy politicians and industrials are concerned by Alitalia's downsizing at Malpensa, including under an Air France-KLM tie-up, and are seeking a three-year moratorium on cutbacks.

A report in Saturday's La Repubblica said Air France is opposed to a moratorium, but could decide to introduce next December some additional flights, previously scheduled for later on.

Industry sources say a moratorium would cost Air France 200 mln eur a year over three years, which be passed on by the government in a lower sale price.

One analyst, who follows Air France and did not provide Alitalia estimates, said Italy's political crisis could delay completion of the sale of Alitalia.

Air France is probably ready to compromise on some aspects of its proposal to buy Alitalia but not on others to win the deal, he said.

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