Alitalia 'on the edge of a precipice', admits Berlusconi

Alitalia personnel celebrated the decision by a consortium to drop a rescue plan for the stricken flag-carrier, a blow to Prime Minister Silvio Berlusconi. Italy said it would ground Alitalia in 10 days maximum if there is no new proposal.


Italian airline Alitalia faced almost certain bankruptcy Thursday after a consortium dropped plans to save the stricken flag-carrier when unions failed to accept a deal that would have cost thousands of jobs.

An official statement said members of the consortium, comprising leading names in Italian industry, voted unanimously at a meeting in Milan to withdraw the one billion euro (1.4 billion dollar) takeover offer.

"Alitalia's crisis... and that of the international markets makes it impossible to extend the discussions which were very deep and led to numerous concessions," the statement sent to AFP said.

Expressing "profound disillusionment," the Italian Airline Company (CAI) said "further concessions would inevitably have put the realisation of the plan at risk."

The nine unions had been given a deadline of 4:00 pm (1400 GMT), when CAI was to meet, to give their response, but only three accepted in last-ditch talks on Wednesday.

The other six, including the pilots' union and Italy's largest employees' organisation, the CGIL, demanded further talks, which both the government and CAI had ruled out.

Transport Minister Altero Matteoli warned earlier Thursday, "There is no alternative -- if we don't sign today, we are facing bankruptcy."

The failure was a blow to Prime Minister Silvio Berlusconi, who had made Alitalia's remaining in Italian hands a matter of political prestige.

"The situation is crucial, we could be on the edge of a precipice," Berlusconi told journalists after hearing the news.

But Sergio Romano, editorialist of Italy's main broadsheet Corriere della Sera, told AFP, "Berlusconi has lost a battle, the first since coming back to power in May. This defeat will not be easy to handle."

Berlusconi had promised before elections this year that the airline would remain under Italian control. He had opposed a takeover offer from Air France-KLM that was rejected by the unions in April.

Former prime minister Massimo D'Alema accused Berlusconi of having "undermined" the Air France-KLM project, even though it had been sounder than the consortium's.

Alitalia personnel meanwhile celebrated the consortium decision at Rome's main Fiumicino airport, with one saying "bankruptcy is better than being controlled by those crooks!"

"We will carry on working with more professionalism than before to show that it is not over," said a defiant pilot who gave his name as Gianluca, 35.

"There are sure to be other negotiations. We are entering a new phase," said a flight attendant.

Employees pinned their hopes on the Italian government nationalising the airline, with many having carried banners conveying the message: "No to privatisation. No to job insecurity. Yes to nationalisation."

"It is up to the government to find the money to rescue Alitalia. It is up to the government to ensure this happens," said a senior member of the SDL union, which opposed the CAI takeover bid.

CAI had said it would keep 12,500 workers from Alitalia and Air One, the country's second airline, which would merge with the bigger company, but 3,250 jobs would have to go.

CAI administrator Rocco Sabelli said the consortium was prepared to leave wages untouched, but working hours and productivity must be increased. The consortium also pledged to give workers seven percent of profits.

The plan also provided for a foreign airline taking a minority stake in the new Alitalia. Labour Minister Maurizio Sacconi said British Airways, Air France-KLM and Lufthansa were all interested, and would not be looking to buy the company.

Offshoots, such as maintenance and freight operations, would be sold off.

The government holds a 49.9 percent share in Alitalia, a national symbol for Italians since it was founded in 1946 and started operations a year later. But the airline has lurched for years from crisis to crisis, and was placed under special administration in August.

The government has spent five billion euros in the last 15 years to keep Alitalia flying, the last handout being a 300 million euro emergency loan in April.

But it is barred by European regulations from subsidising the airline with further public money.

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