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Alitalia chief quits, ending takeover talks with Air France-KLM

Alitalia said Wednesday that its chairman Maurizio Prato was resigning, hours after Air France-KLM ended takeover talks with the Italian unions. (Report: A.Roy)

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Alitalia chairman Maurizio Prato resigned on Wednesday and the airline and its unions have abandoned takeover talks with Air France-KLM, the Italian flag carrier said in a communique.

"Maurizio Prato tendered his resignation as chairman. A board meeting has been called for tomorrow (Thursday) which will decide the appropriate steps," the statement said.

"Negotiations between Air France-KLM, Alitalia and union organisations have been interrupted," Alitalia said in a decision that brings the company to the verge of bankruptcy.

Prato, named in August 2007, was in agreement with the basic elements of Air France-KLM's proposed deal for the takeover of the nearly bankrupt Italian flag carrier and had repeatedly hinted that he would step down if a deal was not reached.

The European giant had said it wanted all the unions to agree to the takeover plan before it went forward.

Air France-KLM chief Jean-Cyril Spinetta earlier on Wednesday walked out of negotiations with the unions after rejecting their counter-proposals to his takeover bid, a union official told AFP.

The unions had asked Air France-KLM to maintain all of the company's activities, while the Franco-Dutch group planned to drop the cargo service and part of the ground maintenance unit AZ Servizi.

Hopes had risen earlier for a breakthrough in the tense negotiations on reports that fewer pilots may face layoffs than initially planned.

Spinetta proposed adding new planes to the fleet earlier than planned, which would mean fewer layoffs for pilots and crew, union sources said, according to press reports.

Newspapers on Wednesday said such moves would save 150 jobs.

As it stood on Monday, the takeover plan called for 2,100 layoffs from Alitalia's 11,000-strong workforce. The European aviation giant has offered to absorb nearly 4,200 workers from the maintenance arm AZ Servizi, which currently employs some 7,400.

As the two sides went into the talks, Italy's outgoing Economy Minister Tommaso Padoa-Schioppa said a takeover by Air France-KLM was the only alternative to bankruptcy for Alitalia.

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