Italians line up for battle of skies

A GROUP of Italian investors is trying to build a new European regional airline on the back of AIM-listed shell company 7 Group.

The company has agreed to buy Milan-based carrier Azzurra Airlines in a reverse takeover, together with most of the assets of insolvent Air Littoral, based in Montpellier, France. It will also bid for Olympic Airlines, the slimmeddown Greek national carrier, on Thursday.

Listing particulars showing annual revenues projected at up to e400m (£277.8m) are expected before Christmas.

Chairman Mario Palmonella says the goal is to create 'a regional airline with a Mediterranean vocation as a leading European entity'. The deals, he says, are a significant step towards becoming a leading investor in the European commercial air transport industry.

Spurning the cheap-ticket, nofrills trail to rapid growth blazed by Ryanair and easyJet, Palmonella aims to satisfy a supposed demand for air links between European regions.

Azzurra, ranked Italy's fifthlargest airline, carries a million passengers a year from Milan's Malpensa airport in 13 jets, connecting with Air Littoral at Nice in southern France.

Air Littoral carried about 2m passengers last year aboard 32 aircraft, but was placed in receivership by Montpellier's commercial tribunal after losses of about e60m. The group has agreed to acquire the company's 17 Canadair 50-seat regional jets and its routes for e15 million, keeping on 608 employees, roughly twothirds of the workforce.

The aim is to run the two airlines in tandem, streamlining the fleet to just the Canadairs and 10 larger Airbus A320s owned or ordered by Azzurra. Because the acquisitions are deemed a reverse takeover, shares in 7 Group, suspended on 29 September, will not resume trading-until new listing details have been drawn up.

The group's adviser, financial boutique Beaumont Cornish, says it hopes to achieve this by Christmas. Details have still to be finalised, but it is believed the relisting could involve raising some £100m of new capital.

Azzurra Airlines is being bought for up to e15m from Air Malta, a founder shareholder with 49% since 1995, and Air International Services.