September 23, 2008

Deadline for Alitalia is Thursday

Alitalia will lose its operating license if a special administrator making a last-ditch attempt to sell the airline does not give Italy's aviation authority a credible new offer or a cost- cutting plan by Thursday.

Following the withdrawal of a rescue plan from Italian investors because of opposition by pilots and other employees, the government- appointed administrator made a last attempt Monday to attract offers, although previous bids to find a foreign buyer had failed.

Paolo Bonaiuti, a spokesman for Prime Minister Silvio Berlusconi, acknowledged that "buyers are not queuing up for Alitalia."

Pilots and crew attempted to attract alternatives to the CAI investor consortium's bid by saying Monday that they would put up their own pay and pensions, worth euro 340 million, or $500 million, "to back any serious, credible project for the relaunch of Alitalia."

But so far, the only interest has been in the state-controlled airline's heavy maintenance and cargo units as well as in leasing unused aircraft. On Monday, the Swiss investment firm AMA Asset Management Advisers said it was interested in buying or renting 30 Alitalia planes.

Flights continued as usual but Alitalia faced being grounded, and its assets liquidated, if there was no last-minute decision by dissenting unions to accept the job cuts and slimmed-down contracts that the CAI consortium had offered.

"Alitalia is flying with a provisional license," Vito Riggio, the head of the aviation body ENAC, said before talks with the special administrator, Augusto Fantozzi, early on Monday.

He said afterward that Fantozzi was given until Thursday to present "a report on the company's prospects, any offers to buy it or a cost-cutting plan" in order to keep its license.

ENAC would then have three days to evaluate the response, but Fantozzi himself said: "If my report does not satisfy the authority, I will seek the suspension of the license."

Alitalia has been on the brink of collapse for years as political interference and labor unrest bled it of cash and caused it to pile up debt. Berlusconi, who made an election vow to rescue the airline, said this weekend no foreign rival would step in and that the national carrier, which employs 19,000 people, might be doomed to bankruptcy.

Fantozzi invited offers of interest in all or part of Alitalia by Sept. 30, without its debts, via the company's Web site.

The only significant offer "was withdrawn," Fantozzi said in the statement. "Therefore, the special administrator intends to verify the existence of other interested parties." He told the daily newspaper Il Messagero on Sunday that the tender would just "formalize what I have been doing - without any results so far - regarding the main assets."

Fantozzi has renewed contacts with Air France, Lufthansa and British Airways, but said: "Nobody has stepped forward."

Originally published by Reuters.

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