Italy scrambles to save bankrupt airline Alitalia

The Italian government held emergency talks with unions and investors today over a plan to save Alitalia, as the bankrupt airline risks having to ground flights for lack of fuel.

The rescue plan would have investors buying profitable assets and investing €1bn, but the plan also envisages wage cuts and lay-offs opposed by the unions.

The government began mediating when direct talks broke down on Friday, after the investors failed to win the unions’ crucial support. The investors said their offer remained on the table.

The labour and transport ministers met today with representatives of flight attendants and pilots, who have been the most critical of the rescue plan. The talks had started on Saturday but ended late at night with no resolution.

Among the sticking points in the talks are new contracts, salary cuts and lay-offs that might run to 5,000 of the airline’s 20,000-strong work force.

Reaching an agreement “depends a lot on what we’ll be able to do today, and on the realism and flexibility that everyone will have: the government, the company and the unions,” said Raffaele Bonanni of the CISL national labour confederation.

Alitalia’s bankruptcy administrator warned on Saturday that time was running out for saving the airline, saying lack of fuel supply and other problems might force the airline to ground some flights.

Administrator Augusto Fantozzi also said he would start procedure to lay off a number of Alitalia workers and enrol them in welfare programmes.

Alitalia also risks losing its licence to operate “if a solution is not found soon that guarantees the continuing of the carrier’s operations,” said the civil aviation agency, ENAC.

The Italian newspaper Corriere della Sera said that the investors might offer an additional €100m in order to minimise the wage cuts and overcome the unions’ opposition.

Alitalia, which had been losing some €2m a day, was declared bankrupt on August 29. The move paved the way for the investors to negotiate their plan to buy Alitalia’s profitable assets.

The rescue plan also reportedly calls for the merger with Italy’s number two airline, Air One, and a partnership with a foreign carrier.