Consortium withdraws Alitalia bid

Posted by admin on 18 September, 2008 under Business news | Read the First Comment

A consortium of investors proposing to rescue airline Alitalia has withdrawn its takeover offer, raising fears the carrier may go into liquidation.

The Italian group, called CAI, dropped its bid after unions failed to back the deal before a 1400GMT deadline.

While four of Alitalia’s unions had supported the deal, five had objected because of plans to cut 3,000 jobs.

Italy’s flag-carrier has already warned that it is running out of funds to buy all the aviation fuel it needs.

Making its announcement, CAI said it expressed “profound disappointment”.

“Further concessions would inevitably have put the realisation of the plan at risk,” it said.

Cancelled flights

Italian Labour Minister Maurizio Sacconi said before the deadline that the future of Alitalia was “hanging by a thread”.

“The company is dead and some of my colleagues want to be its undertakers” Head of the UIL union, Luigi Angeletti

While Italy’s four main union organisations – CGIL, CISL, UIL and UGL – had signed up to the agreement with the CAI, five other unions had rejected the deal as “useless and provocative”.

Those opposed to the package – SDL, ANPAC, UP, ANPAV and Avia – include pilots and cabin crews.

Their protests forced Alitalia, which is losing 2.1m euros ($3m; £1.7m) daily, to cancel 40 flights on Wednesday.

The head of the UIL union, Luigi Angeletti, attacked those unions that rejected the CAI offer.

“The company is dead and some of my colleagues want to be its undertakers,” he said.

Government role

Under the CAI rescue proposal, the Italian consortium had put forward a 1bn-euro offer for the airline.

It wanted Alitalia to merge with Air One, the country’s second-largest airline, while its 1.2bn-euro debt would be absorbed by a second firm, which would then be liquidated.

Prime Minister Silvio Berlusconi has pledged to do all he can to save Alitalia, in which the Italian government holds a 49.9% stake.

In April, plans for the airline to be taken over by France-KLM collapsed when unions refused the accept the terms of the deal.

Alitalia suspended trading in its shares in June and filed for bankruptcy protection last month.

News reported by The BBC