Italy Vows to Keep Alitalia Aloft after Bidder Pulls out
04.04.2008 (11:39) | Internaitional Herald Tribune
With a cash crisis looming for Alitalia, the Italian government vowed Thursday to keep its planes flying despite the collapse of talks with Air France-KLM, the sole remaining bidder for the money-losing carrier.Following an emergency meeting, Alitalia's board named a new chairman, Aristide Police, a prominent Italian lawyer, to replace Maurizio Prato, who resigned late Wednesday in frustration over the deadlock. In a statement late Thursday, the airline added it would take the next several days to study its financial options before deciding on Tuesday whether to continue its operations.
The board added that it still considered the proposed takeover by Air France-KLM to be the most "suitable for assuring Alitalia's return to profitability."
The center-right government of Prime Minister Romano Prodi said it would ensure the continued operation of the Italian flag carrier while it sought to learn "whether there were still margins for an accord with the unions." The fate of Alitalia, of which the Italian government owns 49.9 percent, has become an issue in the general election due to be held April 13 to 14.
Prato announced his departure late Wednesday, just before a midnight deadline for reaching a takeover agreement after a last-minute job-saving proposal by Alitalia's unions was rejected by Air France-KLM.
"I think it is pretty much over," said Chris Avery, European airline analyst at JPMorgan in London. "There are too many unions involved, there is an imminent election and there does not appear to be a viable, concrete alternative proposal out there. I can't see how this can go forward."
Politicians and labor leaders still seemed to be holding out hope of a solution, however. The government said it would undertake informal contacts with union leaders and Air France-KLM in the next couple of days.
Marco Veneziani, national secretary of the UIL transport union, which represents 2,500 Alitalia workers, said Thursday that the immediate priority was to save the carrier from bankruptcy protection and then wait for the Italian elections to make a decision about the future of the company.
"We broke from the negotiations a few days ago because we felt that a new government would be in a position of strength to negotiate with the French government and Air France," he said. "Now we're in an emergency, and if we're calm we'll get out of this."
Veneziani said Air France's most recent proposal to unions was different from what it originally offered, both in terms of layoffs as well as the number of planes that the company was going to retire.
But a person who was present as the talks broke down Wednesday said the chairman and chief executive of Air France-KLM, Jean-Cyril Spinetta, made clear he would not return to the negotiating table.
"Everyone was very cordial, but at a certain point, he just got up and shook hands with everyone, said that he could not accept their proposals and left," said the person, who requested anonymity because they were not authorized to discuss details of the meeting. "There's nothing more to discuss, it's finished. The chief executive is now back in Paris."
The sale of Alitalia has touched nerves across the Italian political spectrum ever since the carrier was first put up for auction 15 months ago. The saga has sometimes taken near-operatic turns, complete with potential bidders - including such unlikely candidates as the Russian state-run carrier Aeroflot - entering and exiting the stage more than once. At one point late last year, Alitalia announced it had received an approach from a mysterious consortium that included Singapore Airlines - a claim that the Asian carrier swiftly denied. The purported offer turned out to have been signed by a representative of Singapore Airlines that did not exist.
The conservative former prime minister Silvio Berlusconi, whom polls show is favored to return as prime minister in the elections, has said publicly that the Italian flag carrier should not be sold to a foreign company and suggested that he would overturn any such deal if elected. Last week, Berlusconi hinted he was gathering a group of Italian businessmen - including at least one of his sons - to make an alternative bid for Alitalia, although no concrete proposal has been forthcoming.
Despite the drama, some analysts said politicians were exaggerating the importance of the national carrier in the minds of average citizens. "Frankly many Italians avoid Alitalia when they can," said Andrea Boitani a professor of economics and transport expert at the Catholic University of Milan. "If people were truly fond of the national carrier it wouldn't have lost its market position so drastically to other carriers."
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