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Italian consortium to bid for Alitalia after all

In a dramatic turn of events, it emerged Friday evening that a consortium of Italian business leaders would indeed be making a formal offer to buy the stricken national airline Alitalia, despite stiff opposition from trade unions.

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A group of business leaders set up to take over stricken flag carrier Alitalia will make a final offer for the airline despite union opposition, Italian media reported Friday.

The announcement contradicts reports earlier Friday that the Italian Air Company (CAI) had withdrawn its offer because unions representing pilots and cabin crew at Alitalia had refused to agree to the deal.

The development came just a few hours before a deadline for a deal was due to expire.

Prime Minister Silvio Berlusconi said Friday evening he remained "optimistic" that an agreement between all parties could be reached before the midnight (2300 GMT) deadline.

Earlier this month, CAI extended its offer by two weeks to the end of October in the hope that a deal could be agreed to resolve the long running saga of Alitalia's future.

In late September, after much wrangling, CAI won union backing for a restructuring plan after making concessions on pay and contractual issues.

The airline, which is 49.9 percent state-owned, is losing about three million euros (4.3 million dollars) a day and has debts totalling some 1.2 billion euros, which will now be shouldered by the Italian taxpayer.

Under the terms of its offer, worth about one billion euros (1.25 billion dollars), CAI would taken on 12,500 Alitalia workers while laying off 3,000.

Air France-KLM, Lufthansa and British Airways have indicated interest in taking part in the new venture, either as stakeholders or, in BA's case, as a partner.

One of the best-known names in global commercial aviation, Alitalia has been in business since 1946-47.

The company symbolised Italy's economic recovery after World War II, becoming the world's seventh largest airline in the 1970s before beginning a long decline, which has grown steeper in recent years.

Although the government sank 4.58 billion euros (6.6 billion dollars) into the company between 1998 and 2005 it continued to haemorrhage money.

Its current fleet of 173 planes flies to 84 destinations, 25 in Italy and 59 abroad, 14 of these on other continents.

The company has practically given up its Milan-Malpensa hub despite its interest for business travellers from Italy's financial and fashion capital. It now mainly operating from Rome's Fiumicino airport.

On domestic flights Alitalia has been feeling the heat from Air One, with which it will merge if the rescue deal on the table is accepted by the unions. The new Alitalia would then hold 56 percent of the Italian market.

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