September 16, 2008

Alitalia’s Main Unions Accept Plan for Rescue

Alitalia's biggest labor unions clinched an initial deal with the airline's potential buyers Monday, raising hopes that it could avoid collapse, but pilots balked and flights risked being grounded for a lack of cash to buy fuel.

The four main Italian unions - CGIL, CISL, UIL and UGL - and a consortium offering to buy Alitalia agreed on the rough outline of a rescue plan that would cut about 3,000 jobs but leave 12,500 workers at the slimmed-down airline. Thousands of other employees are in units that would be spun off.

"It's a first, important step," said Raffaele Bonanni of the CISL union.

But it was not clear whether other, smaller unions representing pilots and cabin crews would agree to the deal being negotiated by their peers. They initially scoffed at the agreement and questioned why they were excluded from talks.

Industry Minister Claudio Scajola warned there were "only a few hours left" to save Alitalia, whose shares have been suspended from trading since June.

Negotiations on tricky issues like salary cuts were set to continue Monday, with no guarantee of success.

"The persistent problem which could, if not resolved, cause this initiative to fail is the new job contracts," said Labor Minister Maurizio Sacconi, confirming the figures on expected job cuts.

The civil aviation authority said over the weekend that Alitalia's operating license was at risk after the airline confirmed it was having trouble buying jet fuel from wary suppliers.

Still, traffic at the main international airports in Rome and Milan was normal Monday morning, airport officials said.

Paolo Scaroni, chief executive of the Italian oil company Eni, said the company would not supply Alitalia with fuel unless it receives cash up front. "Not even if Berlusconi or the Pope asks me to," Scaroni told La Repubblica newspaper, adding, "There is no moral suasion - international agreements are clear."

Alitalia, which is operating under a bankruptcy commissioner, has not generated a profit since 1999 and had nearly euro 1.2 billion, or $1.68 billion, in debt as of July.

A collapse of the airline would be a huge political blow for Prime Minister Silvio Berlusconi, who promised voters he would use his business contacts to find an Italian buyer for Alitalia. The state holds a 49.9 percent stake in the company.

In April, Alitalia's unions sank a deal agreed under the previous, center-left government to sell the airline to Air France- KLM.

Originally published by Reuters.

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