Alitalia in efforts to avoid pre-poll collapse

By Guy Dinmore in Rome
Published: April 8 2008 20:05 | Last updated: April 8 2008 20:05

Alitalia, Italy’s financially crippled flag carrier, hopes to revive rescue talks between trade union leaders and Air France-KLM after next week’s parliamentary elections, thereby sparing the centre-left government the ignominy of a large-scale bankruptcy on the eve of the two-day poll.

Alitalia’s board, meeting in Rome on Tuesday night, was expected to delay a fateful decision on initiating bankruptcy proceedings until after the April 13-14 elections when the political climate will be more conducive to successful negotiations, official sources said.

The government, which owns 49.9 per cent of Alitalia, is due to meet union leaders on Thursday in an effort to persuade them to accept the restructuring and 2,100 job losses proposed in the takeover plan by Jean-Cyril Spinetta, head of Air France-KLM.

Air France-KLM on Monday endorsed Mr Spinetta’s decision to abandon his negotiations with the unions a week ago, but kept its offer on the table. The nine union leaders involved have expressed a willingness to return to the negotiating table after the elections. They are divided over how far they can compromise and complained about pressure from the finance ministry to accept the foreign takeover.

The centre-left government was anxious to avoid the spectacle of bankruptcy proceedings just days before voters head to the polls. Alitalia’s shares remained suspended on Tuesday.

Alitalia’s bid for more time could bequeath the crisis to Silvio Berlusconi, the former prime minister and centre-right opposition leader, who has said he would veto a takeover by Air France-KLM as prime minister.

Jacques Barrot, European transport commissioner, warned the unions to consider carefully the consequences of their actions, noting that the European court would block further state aid to Alitalia.

Copyright The Financial Times Limited 2008