Air France-KLM Cancels Its Bid for Alitalia

22.04.2008 (12:18) | Internaitional Herald Tribune

Air France-KLM said Monday that its offer to buy struggling Italian airline Alitalia is "no longer valid," and left no impression that it planned to return with another.

The French-Dutch carrier said its Italian counterpart has failed to clarify the "legal situation" after talks on a possible takeover were broken off earlier this month.

In a brief statement, Air France-KLM said that it told Alitalia of the decision and that the Italian airline did not meet the necessary conditions. Veronique Brachet, an Air France-KLM spokeswoman, said she would not comment beyond the statement.

Fabio Berti, head of the Alitalia pilots union Anpac, played down the significance of the statement, insisting that it was just a "snapshot" of the state of the deal.

"There is no withdrawal of the offer," he was quoted as saying by Italian news agency Apcom. He said Air France-KLM didn't say it was no longer interested in Alitalia, but only that there weren't the conditions to launch a bid.

There was no immediate comment from Alitalia, which is based in Rome.

Air France-KLM's offer, announced March 14, valued Alitalia at €139 million, or $220 million, and called for the layoffs of 2,120 Alitalia employees, among other measures.

Air France-KLM was the only offer on the table, but negotiations broke down three weeks ago after the French-Dutch company wouldn't bow to the Italian union's demands.

Italy's economy minister had warned that if the Air France-KLM deal did not go through, Alitalia could face bankruptcy.

Italian news reports said the Italian government would hold a special cabinet meeting in the next 48 hours on Alitalia, which is 49 percent state-owned. The Italian flagship carrier is losing some €1 million a day, and the government has been trying for months to find a buyer.

Silvio Berlusconi, the Italian prime minister-elect, had vowed this month on the campaign trail to veto any deal with Air France-KLM, and had insisted for weeks that a group of Italian businessmen were ready to step forward with their own offer. No such group ever came forward.

Francesco Rutelli, the center-left deputy prime minister, said Air France-KLM's retreat was a "disastrous consequence" for which he blamed lobbying by the conservative Berlusconi and his northern electoral allies against the deal.

Some unions feared that Air France-KLM would scale down operations at Malpensa airport in Milan if it acquired Alitalia.

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