Alitalia on verge of bankruptcy as talks end

Alitalia on verge of bankruptcy as talks end

By Guy Dinmore in Rome

Published: April 2 2008 18:49 | Last updated: April 2 2008 23:21

Alitalia, the Italian airline, was Wednesday night left considering whether to start bankruptcy proceedings after Air France-KLM pulled out of takeover talks.

Maurizio Prato, Alitalia chairman, resigned after talks with trade unions broke down over proposed job cuts. “This airline is cursed. Only an exorcist can save it,” he was quoted as saying by a union official.

Jean-Cyril Spinetta, head of Air France-KLM, flew out of Rome, issuing a statement that conditions no longer existed for negotiations. He blamed the unions, saying their proposals would have left Alitalia still burdened by heavy lossmaking activities.

The talks were billed as a final effort to meet a midnight deadline for agreement set by management. However, Mr Spinetta indicated that his offer remained on the table should the nine unions have a change of heart.

Earlier in the day, Tommaso Padoa-Schioppa, finance minister, warned the alternative to an Air France-KLM takeover would be the appointment of a special commissioner to initiate bankruptcy proceedings.

The government, which had accepted the offer for its 49.9 per cent share of Alitalia, would deny a requested €300m (£237m) bridging loan to Alitalia if the deal fell through. The minister said: “These are decisive hours.”

Alitalia’s board is to meet Thursday to decide whether to appoint its fourth chairman within a year and struggle on with dwindling reserves, or launch bankruptcy proceedings. These begin by halting debt payments.

The fate of the 60-year-old flag- carrier, which last made a profit in 1998, could hang on the outcome of parliamentary elections set for April 13-14.

Even if the unions had accepted the proposed 2,100 job losses, Silvio Berlusconi, the centre-right opposition leader, had threatened to veto the deal should he win the elections, as opinion polls indicate he will.

Romano Prodi, the outgoing centre-left prime minister, expressed his dismay Wednesday night at the unions’ rejection. Politicians on the left accused Mr Berlusconi of electioneering.