Alitalia rescue shifts focus to finding partners

ROME Sun Sep 28, 2008 10:39am EDT

1 of 3. An Alitalia plane approaches to land at Fiumicino International Airport in Rome September 25, 2008.

Credit: Reuters/Max Rossi

ROME (Reuters) - Alitalia's prospective owners, with key unions finally backing their rescue plan, say they are shifting their focus to forming a tie-up with either Air France-KLM or Lufthansa and launching the new airline by November 1.

Business consortium CAI struck an agreement early on Saturday with long-reluctant pilots broadly to back their rescue plan, in a breakthrough that lifted the threat of an imminent liquidation of Italy's largest airline.

It was a major victory for Prime Minister Silvio Berlusconi, who was elected in April promising to save the state-controlled carrier from buckling under the weight of its losses and debt.

Union holdouts representing flight attendants still must meet on Monday to decide on a plan under which CAI cut will jobs and wages, while only taking profitable parts of Alitalia.

But with the biggest and most important unions behind them, CAI Chief Executive Rocco Sabelli said he was now looking ahead to signing an agreement with an international partner.

"Now that there's been the agreement with pilots ... from next week we'll dedicate ourselves to a foreign partner," Sabelli told an Italian newspaper.

"We'll make a decision based on industrial logic between Air France and Lufthansa. What's certain is that control will remain in Italian hands and the partner will have a minority stake."

Both Air France-KLM and Lufthansa have shown interest in a relaunched Alitalia, as the European airline industry goes through convulsions of consolidation in the wake of crippling oil prices.

A reborn Alitalia could be in place by the start of November, the chief executive of bank Intesa Sanpaolo, one of the CAI consortium's members, said.

"November 1 remains an attainable target for the start of the new journey," Corrado Passera told Il Sole 24 Ore newspaper.

"But there are still a lot of deadlines, appointments and operating problems that need to be resolved during October."

Labor Minister Maurizio Sacconi has warned that problems included securing approval from the European Union, buying smaller airline Air One under CAI's plans to put the two carriers together, and valuing the assets to be bought.

A triumphant Berlusconi said that the government, after bringing together a business consortium to save Alitalia and then brokering the deal with unions, would step back and let CAI decide on a foreign partner.

"It's up to the businessmen, their good sense, to their intentions and their industrial plan," Berlusconi told local media. "We need to stop here. We gave our contribution."

Observers have speculated that Berlusconi would favor a tie-up with the German carrier after opposing Air France-KLM's attempt to buy Alitalia earlier this year.

While Labour Minister Maurizio Sacconi told Corriere della Sera newspaper both contenders were on an equal footing at the moment, the head of the Anpac pilots' union told Il Giornale daily that he thought CAI's plan would favor Lufthansa.

"In reality, an Alitalia based on Rome is an Alitalia for Air France-KLM, an Alitalia based on Milan is for Lufthansa. The plan CAI has shown is very much balanced toward Milan," he said.

Berlusconi seemed content with progress made and praised his own efforts to save the airline and keep it mostly in Italian hands.

"I'll remind you how they laughed and mocked us when we said that an Italian company would be the ones to put up the important capital. It all came true."

(Additional reporting by Jo Winterbottom in Milan; Writing by Phil Stewart; Editing by Paul Bolding)

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