Ailing Italian airline Alitalia said on Tuesday it posted a 2007 loss of EUR495 million euros and repeated it needed a new capital quickly to keep flying.
Alitalia said in a statement the loss was narrower than a EUR627 million loss in the year-earlier period, when a EUR197 million write-down on its fleet dragged down the results. But it was still wider than a pre-tax loss of EUR363.9 million for 2007 announced in February.
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 company earlier on Tuesday won a badly-needed lifeline from the government, which converted a EUR300 million (USD$473 million) emergency loan to the carrier into an asset on its books. The decree will come into effect by Thursday, Economy Minister Giulio Tremonti said on Tuesday.
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 on Tuesday 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 rising 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 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.
It says a capital increase will have to be launched to allow the repayment of the loan after the government's 49.9 percent stake in Alitalia has been sold.
Italian media have said auditor Deloitte & Touche had been reluctant to sign off on Alitalia's 2007 accounts due to concerns about the accounting of some items and about whether the loan could be treated as part of Alitalia's capital.
Further weighing on Alitalia's 2007 accounts was a new EUR97 million write-down of the value of its fleet.
The accounting move by the government is likely to invite further scrutiny from the European Commission, which is already looking into whether the EUR300 million emergency loan violated EU rules barring further state aid.
Prime Minister Silvio Berlusconi, who took office this month after winning a general election in April, has promised to find a consortium of Italian businessmen to rescue Alitalia, but such a group has yet to emerge.
