September 9, 2008

Failing Italian Airline Faces Deadlines

ROME (AP) -- Government and union officials must reach a deal on a plan to save Alitalia by the end of next week because the failing airline cannot keep flying much longer, Italy's labor minister said Monday.

By mid-September, the state-controlled carrier could begin experiencing "operational problems, which in time can result in an impossibility to survive," Maurizio Sacconi told reporters during a break in initial talks between the government and unions representing Alitalia workers.

The head of a powerful labor confederation took a tough stand going into the meeting called to discuss plans to sell parts of Alitalia.

CGIL labor confederation chief Guglielmo Epifani said the government should not expect unions to rubber-stamp the plan without substantive talks -- especially concerning layoffs.

Newspapers have reported that 5,000 to 7,000 jobs could be lost from a work force of 20,000. The laid-off workers might be enrolled on welfare programs for up to seven years, according to the reports.

"There needs to be real discussion on the industrial plan," Epifani said in an interview published in the daily L'Unita. "It is not a take-it-or-leave-it deal."

Speaking in Brussels, where he was attending an EU summit, Premier Silvio Berlusconi said the plan was conditional on union approval, but he added that "no" was hardly an option.

"They can't go against the right thing and against the only possible choice," he was quoted as saying by Italy's ANSA news agency. "The alternative is for all the 20,000 to go home."

Union opposition prompted Air France-KLM to abandon efforts to buy the failing carrier last spring. But analysts say that either the airline is sold or it will fail.

"When Alitalia's unions meet government officials to thrash out an understanding, they don't start from a strong position," the Center for Asia-Pacific Aviation said in an analysis. "But they still have the power to undermine Berlusconi's 'miracle' -- and that will be their main card."

Alitalia declared bankruptcy last week and has sought bankruptcy protection. Former finance minister Augusto Fantozzi was named by the government as the company's administrator as part of the plan to restructure the unprofitable and debt-laden national carrier.

The plan reportedly calls for breaking Alitalia into two parts, with the profitable assets to be taken over by a group of Italian investors ready to inject 1 billion euros ($1.5 billion) and the other assets liquidated. Italian investors are headed by Piaggio's Roberto Colaninno.

(c) 2008 Tulsa World. Provided by ProQuest LLC. All rights Reserved.