Alitalia Shares Jump on Merger Speculation MOVERS MARKETPLACE By Bloomberg
Posted on: Thursday, 5 January 2006, 12:00 CST
Shares of Alitalia jumped 5.5 percent Wednesday on speculation that the company, Italy's largest airline, would merge this year with Air France-KLM Group, Europe's biggest carrier. Air France said it was holding its stake steady. MOVERS: Alitalia shares rose 5.8 cents to close at 1.12, bringing the gain in the first three trading days of 2006 to 18 percent and valuing the carrier at 1.55 billion, or $1.9 billion. The shares had fallen 50 percent in 2005. "The fact that investment funds and Air France bought Alitalia shares last month show that the alliance with Air France may come soon," said Alessandro Capuano, a trader at Finspreads in London
. "Alitalia shares could rise to as much as 1.40." Alitalia last month sold 1 billion of new shares to current investors, including Air France, to raise funds and stay in business. Alitalia split last year into an airline called AZ Fly and a ground-services unit called AZ Servizi. The company seeks to cut costs by 1 billion over the next four years to restore profit after four years of operating losses. Alitalia, which had planned to take part in the combination of Air France and KLM Royal Dutch Airlines in 2003, postponed merger talks after facing insolvency last year. Alitalia and Air France own 2 percent of each other's stock. Air France maintained its stake by taking part in Alitalia's sale of securities in December. Executives at the two airlines have said Air France might consider a greater alliance with Alitalia once the Italian carrier is healthier financially.Source: International Herald Tribune
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