Ailing Italian airline Alitalia today posted a loss of €495 million for 2007 and called for an urgent injection of new capital to keep flying.
Alitalia said in a statement the loss was narrower than a €627 million loss in the year-earlier period, when a €197 million write-down on its fleet dragged down the results. But it was still wider than a pre-tax loss of €363.9 million for 2007 announced in February.
The company was recently saved from collapse by a €300 million loan from the Italian government which is under scrutiny to see if it breaches European state aid rules.
Last night the company got a badly-needed lifeline from the government when it converted the emergency loan into an asset on its books. The decree will come into effect tomorrow, Economy Minister Giulio Tremonti said.
Alitalia's finances have been deteriorating rapidly, leaving in doubt whether it can avoid bankruptcy after a planned takeover by Air France-KLM fell apart.
The move, which the government has said is temporary, was designed to win the approval of auditors for the airline's precarious finances.
Alitalia's board, which met for a second consecutive day yesterday to approve its 2007 accounts, said the loan had improved the airline's liquidity, but it needed new capital very quickly. It said it was waiting for the controlling shareholder - the government - to indicate the way forward.
Since the collapse of the Air France-KLM's deal earlier this year, the airline's accounts have worsened as passenger bookings fall, debt rises and costs spiral higher on the back of soaring oil prices.
The board had already adjourned its meeting from Monday to Tuesday as it waited for the government to follow up on its pledge to turn the emergency loan into an asset.
Italian legislation usually comes into force the day after being published in the Official Gazette. Tuesday's edition of the Gazette did not mention the decree.
The text of the decree, seen by Reuters, states the loan would be used to keep Alitalia from falling under the legal capital minimum, which would effectively force the airline to declare bankruptcy.