Rome in final bid to save Italian airline

Passengers were deserting Alitalia yesterday as they feared the airline's imminent bankruptcy, while the Italian government made a last-ditch effort to revive talks between union leaders and a consortium of potential investors.

Silvio Berlusconi, the centre-right prime minister who campaigned in April's elections to keep Alitalia in Italian hands, was expected to call off or cut short his trip to New York for the UN General Assembly to stay in Rome to deal with the crisis, an aide said.

Roberto Colaninno, head of Piaggio, the scooter-maker, and chairman of the Cai takeover consortium, met government officials last night for the first time since the group withdrew its €400m ($583m, £317m) offer last Thursday in the face of opposition from six of the nine trade unions representing Alitalia workers.

Passengers appeared yesterday to be abandoning Alitalia, with many shifting to Air One, even though this smaller rival airline was charging €560 for a return Rome-Milan ticket - over €200 more than Alitalia which was flying well below capacity. The takeover plan for Alitalia would merger it with Air One.

Consortium members said the offer would remain withdrawn until the unions agreed to the stringent job and salary cuts proposed. Last night the leftwing CGIL union federation indicated it would come on board, but pilots and flight assistants remained opposed.

The civil aviation authority has given Augusto Fantozzi, the airline's administrator, until tomorrow to deliver a viable financial plan or lose its flying licence by Sunday. Mr Fantozzi says he can pay wages until the end of the month.

Despite the stand-off, some of the 16-member consortium and various players in the aviation industry cling to the belief that Mr Berlusconi, a billionaire entrepreneur who has staked his credibility on rescuing Alitalia, will engineer a solution.

The carrier has filed for bankruptcy protection and is losing over €2m a day.

Alitalia's travails resemble those of Olympic Airlines, the loss-making Greek state carrier which also faces union protests over the centre-right government's privatisation plan.

Olympic employees yesterday blocked the main runway at Athens airport, forcing traffic controllers to divert flights.

Olympic, with over €1bn of debt, is to be shut down by the end of this year. It will be re-launched next April, provided a investor can be found to acquire a 65 per cent equity stake.

© The Financial Times Limited 2008. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation