TPG shows interest in Alitalia

Texas Pacific Group president David Bonderman, who made millions turning around Continental Airlines, has expressed interest in buying Alitalia if the Italian government decides to privatise the airline.

David Bonderman, the president and co-founder of Texas Pacific Group, has told an Italian newspaper that the firm may be interested in purchasing Alitalia if the Italian government decides to privatise the loss-making airline.

According to Italian newspaper Il Sole, Bonderman said, “Alitalia is a company that could be very interesting, I can’t deny that.” He added that Texas Pacific would not make a move on the company “until the government has decided on that company’s future and therefore its privatisation.”

Based on its current share price the airline is worth a total of €1.14 billion ($1.44 billion). The Italian government owns a 49.9 percent stake in the airline, Air France-KLM owns 2 percent, and the remaining shares are free floated on the Milan stock exchange.

A spokesperson for Alitalia said they were not aware of the interest before the newspaper report.

TPG has previous experience in the airline sector. Bonderman, along with James Coulter, led the 1992 investment of bankrupt Continental Airlines for $450 million. The firm the two men created, Air Partners, and was formed expressly for the acquisition. At the time Continental seemed hopeless – this was its second bankruptcy in six years – but Bonderman’s team brought the New York-based airline back to soaring profitability in the mid 1990s. They sold their stake in 1998, collecting an 11-fold return.

Alitalia is trying to turn around from recent losses by selling off its ground services business, but its first-quarter results showed operating losses had widened to €128.8 million from €118.1 million in the same period of 2005.