Bloomberg News

Alitalia, Landcom, MFI's Buyout, Motor World: Bankruptcy

September 29, 2008

Alitalia SpA's two remaining unions that have yet to agree to bidding group CAI's takeover terms resume talks today on the government-backed transaction aimed at rescuing the airline.

The Sdl and Avia, unions representing most of Alitalia's 4,500 flight attendants, are the last two of the airline's nine labor groups still negotiating with CAI on the Rome-based carrier's fate. The unions said they were ``making some progress'' when talks were suspended Sept. 26.

CAI, a partnership of Italian investors led by Piaggio & C. SpA Chairman Roberto Colaninno, aims to merge Alitalia's flight business with domestic competitor Air One SpA to create an airline that controls more than half of the Italian market. Seven Alitalia unions, including pilots on Sept. 27, have agreed to about 3,000 job cuts and longer hours at current pay.

``They'll sign, because at this point it wouldn't be logical or convenient not to,'' Massimiliano Romano, head of research for Concentric Italy in Milan. ``Pilots are hard to come by, and that was the concern there, but I think flight attendants have less negotiating power.''

Alitalia, which flew 25 million travelers last year, risks becoming the first major European flagship carrier to collapse since Swissair Group and Belgium's Sabena in 2001. The airline's stock hasn't traded since June, and the company was losing $3 million a day when it declared insolvency on Aug. 29 to allow the state-backed rescue plan to begin.

The carrier's bankruptcy administrator, Augusto Fantozzi, said on Sept. 24 that Alitalia doesn't have enough cash to survive beyond this month.

Landcom Files for Bankruptcy With 30.9 Billion Yen Debt

Landcom Corp., a Japanese real estate developer, filed today for bankruptcy protection with the Tokyo District Court after accumulating about 30.9 billion yen ($291 million) in liabilities.

The company, based in Yokohama, south of Tokyo, made the announcement in a filing to the Tokyo Stock Exchange.

MFI Agrees to Buyout by Executives to Escape Administration

MFI Retail Ltd., a U.K. kitchen and bathroom retailer, agreed to be bought by executives to escape going into administration.

Current owner Merchant Equity Partners will sell the company to managers led by Chief Executive Officer Gary Favell, according to an e-mailed statement from MFI dated yesterday. The purchase will be funded through a ``substantial cash dowry payment'' and ``will secure the future of the MFI business and safeguard employees within the store network,'' the statement shows.

Motor World Collapses, Costing 300 Jobs; 95 Stores Are Closed

Motor World Ltd., a closely held U.K. retailer of car and motorcycle accessories, collapsed Sept. 25 at a cost of 300 jobs and 95 store closings.

The remaining 142 shops were sold to Pacific Retail Ltd., saving about 500 jobs, administrator BDO Stoy Hayward LLP said today in an e-mailed statement. Pacific Retail is controlled by Bailey Capital Ltd., an investor in Huddersfield, England-based Motor World, the statement showed.

The retailer failed after consumer spending weakened and stores began losing money, BDO Stoy Hayward said. Britons have less to spend in shops as higher food and energy bills sap incomes, leading to the collapses of the likes of home- furnishings retailer Rosebys, announced Sept. 26, and furniture maker Willis Gambier Holdings Ltd., unveiled Sept. 25.

``Despite a strong trading name and presence on the high street, Motor World has been a direct casualty of the current retail difficulties and the continuing squeeze on available credit,'' Dermot Power, business restructuring partner at BDO Stoy Hayward, said in the statement.

To contact the reporter on this story: Caroline Binham in London at cbinham@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


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