September 28, 2008

Lufthansa Meets Alitalia Unions to Discuss Deal

By From news reports

The German airline Lufthansa met with Alitalia's labor unions Friday to discuss the possibility of taking a stake in the struggling airline as the Italian government pushed to wrap up talks with unions and seal a rescue deal.

Lufthansa and Air France-KLM are jostling to grab a foothold in the attractive Italian market through an alliance with Alitalia after the company's proposed reshaping by CAI, a consortium of investors seeking to buy Alitalia's best assets. The CAI deal lurched back to life Thursday after it won the backing of four major Alitalia unions, and negotiations continued Friday to persuade unions representing pilots and flight attendants to back the plan.

The Italian government has already convinced Anpav, a union representing flight attendants, to back the deal. The Italian labor minister told Italian television that he was hopeful of clinching support from the remaining unions by a Friday deadline, but that the CAI consortium would press ahead with its offer even without their backing.

CAI, which consists of 16 investors, has said its bid will be valid until Oct. 15.

The four big unions backing the bailout met the chief executive of Lufthansa, Wolfgang Mayrhuber, on Friday, and Luigi Angeletti, leader of the UIL union, told Italian television that Mayrhuber had expressed his interest in Alitalia. Lufthansa declined to comment specifically on its interest in Alitalia but said that Mayrhuber was in Rome at the request of the Italian government to discuss Alitalia's future.

Lufthansa has long had its eye on the Italian market, but the latest meeting was its strongest demonstration yet of its interest in striking an alliance with Alitalia.

According to people with knowledge of Alitalia's situation, and who requested anonymity when speaking to the media, Lufthansa is considering the purchase of a 20 percent stake in the airline, and possibly an even larger ownership. Air France-KLM, whose deal to buy Alitalia collapsed earlier this year over union opposition, is also interested in buying a stake of up to 25 percent in the CAI consortium.

But Air France-KLM could face an uphill climb in its effort, with some Alitalia unions openly supporting Lufthansa, and with Prime Minister Silvio Berlusconi indicating that he too would favor an alliance with the German carrier.

The acceptance of the CAI's proposal by the four big unions Thursday came after the government toiled to bring the center-left CGIL union back to the negotiating table.

Sealing the carrier's rescue would be a political triumph for Berlusconi, who made an election pledge to save the airline and keep it Italian.

Originally published by Reuters, IHT.

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