Air France Buys Alitalia in Cut-Rate Deal
Struggling Italian carrier sells for 81% below market value
By Sam Biddle,  Newser Staff
Posted Mar 17, 2008 3:07 AM CDT
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...
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(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.