Air France-KLM threaten to withdraw offer

Thursday 20 March 2008

Head of Air France-KLM Jean-Cyril Spinetta has toughened the negotiations for an Alitalia takeover, threatening to withdraw their offer if Italian unions carry on refusing a compromise. (Report : S. Bähr, S. Silke)

Thursday 20 March 2008

By AFP

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A bid by Air France-KLM to take over Alitalia was under threat Wednesday as the head of the French-Dutch company warned unions at the loss-making Italian airline there was little or no room for negotiation.

"It's not a traditional negotiation," chairman Jean-Cyril Spinetta told a news conference in Rome a day after failed talks with union leaders over the bid.

"The room for manoeuvre is very small or non-existent" for a company on the verge of bankruptcy, Spinetta said.

"I can't think of an example of a struggling company being turned around without the support of its workers. ... If this support doesn't exist, it will be very difficult for Air France to commit to a very difficult operation in these conditions."

Spinetta acknowledged earlier that the deal was "in jeopardy," while the main unions issued a joint statement arguing that the negotiating timetable was unrealistic -- Air France-KLM wants an agreement by the end of March.

The French industrialist urged resumed negotiations with the unions "as soon as possible to reach a positive conclusion."

Vowing an "exemplary" social programme for the Alitalia work force, Spinetta said: "I fully understand that the unions in this complex affair need some time to evaluate the plan as a whole."

He added that a total of 2,100 jobs would be cut from the airline's 11,000- strong work force.

The unions fear job losses of up to 7,000.

Labour must approve the takeover plan for Alitalia, which is losing about one million euros (1.6 million dollars) a day.

Italy's outgoing centre-left government on Monday approved the acquisition of the state's 49.9 percent stake through a share swap of one Air France-KLM share for every 160 Alitalia shares.

That values the Italian airline at 140 million euros (218 million dollars).

Spinetta and Alitalia counterpart Maurizio Prato met Wednesday with Italian Economy Minister Tommaso Padoa-Schioppa and Enrico Letta, secretary of the prime minister's office, the Radiocor news agency reported.

A labour source told AFP that union leaders would meet early Thursday with Alitalia alone.

The takeover plan also entails massive cutbacks of operations at Milan's Malpensa airport and is opposed by many politicians in the north, a right-wing stronghold, with general elections less than a month away.

"They're giving away Alitalia, our national company, and they want to close Malpensa, Italy's gateway to the world," conservative leader Silvio Berlusconi lamented in an open letter on Wednesday.

Berlusconi, twice a former prime minister, is tipped for a return to power in the April 13-14 elections.

Italy's outgoing centre-left government on Monday approved the acquisition of the state's 49.9 percent stake through a share swap of one Air France-KLM share for every 160 Alitalia shares, or 10 euro cents each.

The deal values the Italian airline overall at 140 million euros (218 million dollars).

Alitalia's share price recovered slightly on Wednesday after some dramatic plunges, closing 1.45 percent up at 28 euro cents.

Some 350 demonstrators took part in a protest outside Alitalia headquarters on Tuesday including employees of AZ Servizi, the maintenance unit that would be shut down under the takeover deal.

A second demonstration was staged at Rome's Fiumicino airport.