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Air France Buys Alitalia in Cut-Rate Deal

Posted Mar 17, 08 3:07 AM CDT in Business 

(Newser) – Embattled Italian airline Alitalia has accepted a severely discounted buyout from Air France, the BBC reports. The $1.17-billion deal, which includes both the airline and its debt, sees Air France take over the Italian carrier at 81% below company's current share price. Alitalia has been in the red for the past five years, and failed to find a buyer at auction last year.

The agreement is still pending the approval of the Italian government—which holds 49.9% of Alitalia’s stock—as well as the blessing of European regulators. Air France plans to inject $1 billion in capital into the ailing Alitalia through an offering of new shares, hoping to curb losses for the company. The airline is currently hemorrhaging $1.59 million a day.

Sources BBC, New York Times

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Air France-KLM chief executive Jean-Cyril Spinetta arrives with former Alitalia CEO Francesco Mengozzi, left, for a meeting with UGL union leaders in Rome, Wednesday, Jan. 9, 2008, after talks with Italian...
An Air France plane, left, and an Alitalia plane, right, are seen at Charles de Gaulle airport, outside Paris, Sunday, March 16, 2008.   (AP Photo)
Alitalia and Air France airplanes are seen on the tamrac of Rome's Fiumicino international airport in this Dec. 18, 2007 file photo.
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