Alitalia shares suspended after 15% drop

Alitalia shares were suspended after falling 15% on the Italian stock exchange, and government officials warned the struggling carrier could go bankrupt as talks with unions continued on a plan to rescue the company.

Alitalia bonds were also suspended.

After just under an hour’s suspension yesterday, trading of shares resumed, with stocks down about 12.5% at closing time.

The losses came a day after the company said it only had some €200m in liquidity left to deal with the crisis, and warned it was running out of time to implement the rescue plan.

“Alitalia can be rescued but it can also go bankrupt,” said European affairs minister Rocco Buttiglione, who is taking part in the talks.

“Everybody must take a step back, everybody must be willing to make sacrifices that are necessary to relaunch and rescue Alitalia,” he said.

Industry minister Antonio Marzano also warned that if an agreement were not reached on the plan, Alitalia might have to be put into state receivership.

Both the government, which owns 62% of the airline, and Alitalia management have been working on a restructuring plan, but unions have been refusing to cooperate. The company last achieved an operating profit in 1998 and is estimated to lose €50,000 an hour.

Plans presented so far included thousands of layoffs from Alitalia’s 21,000 work force.

Last week, workers staged a series of wildcat strikes to protest the expected redundancies, plunging Alitalia into chaos at airports across Italy. On Friday alone, the walkouts forced the cancellation of 700 flights, despite a government order for employees to go back to work.

Alitalia needs to improve its financial health in hopes of joining an alliance formed by a planned merger of Air France and KLM Royal Dutch Airlines. Analysts say such an alliance is key to Alitalia’s survival.