Italy’s transport minister yesterday said that the country’s largest airline, Alitalia SpA, could have to file for bankruptcy in a few months if government attempts to sell a controlling stake fail, the Associated Press reported yesterday. “If we’re not able to sell Alitalia in an acceptable manner within the next two to three months, we’d run the serious risk of bankruptcy,” Transport Minister Alessandro Bianchi said. The Italian government has been struggling to sell its 49.9 percent stake in loss-making Alitalia. A tender organized by the treasury was scrapped in July after all the potential bidders gradually pulled out, saying the sale terms didn’t give them enough freedom to implement a restructuring strategy. Beset by high operating and fuel costs, stiff competition from budget airlines and persistent labor strikes, Alitalia’s net loss rose to 626 million euros in 2006 from 168 million euros a year earlier after it booked a hefty write-down to cover the depreciation in value of its aging fleet.
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With buyers lined up to bid for its Land Rover and Jaguar brands, Ford Motor said yesterday that it had decided to keep Volvo, at least for now, and would make an effort to fix the money-losing Swedish carmaker, the New York Times reported today. Ford’s chief executive, Alan R. Mulally, said that the company was not seeking a buyer for Volvo, even though it had adopted a strategy of focusing on its core domestic brands as part of its North American turnaround. Meanwhile, Ford said that it expected to sell Land Rover and Jaguar by early 2008. The company did not name potential buyers, but preliminary offers were made by half a dozen companies, including TPG, a private investment group formerly known as the Texas Pacific Group, and Tata Motors of India, people with direct knowledge of the bidding process said.
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The Internal Revenue Service, heightening a probe of the financial industry, is examining whether hedge funds and private-equity firms improperly avoided paying taxes, the Wall Street Journal reported today. The IRS said that it is seeking to “identify any areas of possible noncompliance in the income tax reporting of hedge fund and private equity fund investors and managers.” The IRS identified, among other areas, potential abuses in financial firms paying withholding taxes. A number of hedge funds said that they haven’t received requests for information from the IRS, but the agency has asked securities firms for data relating to clients and their trading activities. The IRS identified several areas of focus, including whether hedge funds and private-equity firms and their managers are failing to file or are filing tax returns improperly; whether managers improperly are classifying income as more lightly taxed capital gains rather than ordinary income; whether funds are recognizing income properly; and whether funds are using offshore entities to circumvent income taxes.