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Alitalia Still Has Cash to Operate, Loss Narrows

Italy's struggling national carrier Alitalia said late Wednesday its net loss narrowed marginally in the first half of the year but it still has enough cash reserves to keep flying for another year while new management seeks a buyer.

In a statement, the 49.9%-owned airline said its first-half netloss was 211.1 million euros ($293.4 million), a slight narrowing from the 220.2 million loss reported in the same period a year earlier. Alitalia didn't disclose details for the second quarter.

The company said first-half revenue edged up 3.1% in the first half to 2.31 billion euros from 2.24 billion euros a year earlier, but operating costs grew 3% to 2.44 billion euros from 2.37 billion.

While fuel costs dropped 1.5% in the half, personnel costs grew 14% as the airline hired more staff in line with previously struck labor agreements.

The Rome-based company did not comment on progress in new Chairman Maurizio Prato's search for a buyer in the wake of the government's failed attempt to auction its stake earlier this year.

Earlier Wednesday, Alitalia denied Italian press reports that it was in high-level talks with Air France-KLM, which has often been put forward byanalysts as a likely buyer for the company.

Prato said earlier this month that, in association with the airline's financial adviser, Citigroup, he intends to sound out all potential suitorsby the end of September. These include private equity house TPG, privately owned Italian airline Air One, and Russian flag carrier Aeroflot, all of which have previously expressed interest in the airline.

Alitalia's plight has been exacerbated by the rapid growth of low-cost carriers like Ryanair and easyJet, and by persistent labor unrest, as powerful unions seek guarantees over future staffing despite management's attempts to broach the issue of restructuring.

Alitalia reported last month that the company's net debt was 1.05 billion euros at the end of July, while its market capitalization has slipped about 20% since the start of the year to just under 1.2 billion euros.