September 25, 2008

Italian PM Makes Final Push to Salvage Alitalia

Italian prime minister Silvio Berlusconi has called upon key players to hopefully clinch a last-minute deal to rescue Alitalia, as Italy's civil aviation authority ENAC has threatened to scrap the struggling airline's operating license.

Alitalia is close to bankruptcy and could see around 19,000 staff being laid off. Concurrently, Mr Berlusconi's close aide Gianni Letta has held talks with union leaders, the CAI investor consortium and the former CEO of Alitalia, Francesco Mengozzi, who now works as a consultant for Air France-KLM.

CAI had offered to take over Alitalia's profitable assets, but then withdrew its offer following the refusal of certain unions to accept the deal. CAI set out plans to inject $1.4 billion into the Italian flag carrier, sell loss-making assets and merge the remainder into Air One, Italy's second largest airline.

The talks with Mr Mengozzi reportedly centered on Air France-KLM picking up a stake in the CAI consortium if it renewed its bid for Alitalia, which is 49.9% state-owned. Industry sources have revealed that the Confederazione Generale Italiana del Lavoro labour union, which has strongly opposed the CAI deal, could be ready for a compromise.

Alitalia, which is operating on a provisional license, is reportedly losing around E2 million a day. Meanwhile, the airline's bankruptcy administrator, Augusto Fantozzi, is expected to submit a plan to ENAC calling for a reduction of flights. Mr Fantozzi has said that he is optimistic that an eleventh-hour deal can be secured before September 30, 2008, to rescue the airline.