Berlusconi vows to keep Alitalia flying

By Deepa Babington and Gilles Castonguay

ROME/MILAN (Reuters) - Silvio Berlusconi, Italy's next prime minister, vowed to do everything possible to keep Alitalia in the air as its management said time was fast running out for the state-owned airline to survive.

"There's little money, there isn't the time, it's a dramatic situation," Alitalia Chairman Aristide Police said, according to a union source at a meeting with management.

Alitalia's planned takeover by world leader Air France-KLM fell apart before the election over union opposition but Italy's outgoing government had been working to revive it.

Berlusconi, who swept to power on Monday after the vote, said the airline's survival would be one of the first "emergencies" he would address after taking office -- which might not be for another month in Italian procedures.

"We've got to sort it out quickly and well," he said at his first press conference after winning power.

"Everything that is necessary to keep the flag carrier working and remaining to support tourism and the economy will be done," he told Italian radio earlier.

Late on Tuesday, Prodi's office released a statement in which it said it would seek an urgent meeting with Berlusconi or one of his aides, in the light of his comments.

"The government feels it is indispensable that the situation is dealt with in depth in an urgent meeting with a representative of the leader of the coalition that won the election," it said. Unions had called for bipartisan talks.

Billionaire businessman Berlusconi had used the prospect of Alitalia being taken over by a foreign airline as a rallying cry during his election campaign.

He continues to promise he has "tens of business owners" ready to invest in the airline.

Alitalia, whose shares were suspended on Tuesday before closing up 18 percent at 0.59 euros, has a market value of under 700 million euros and about 1.37 billion euros of debt.

Critics attacked Berlusconi's comments as campaign rhetoric that risked pushing the carrier closer to bankruptcy and the outgoing government has maintained the only alternative to the Franco-Dutch buyer is administration.

WEEKS TO GO?

Alitalia's ready cash is shrinking by about 3 million euros a day and now has funds left only for the immediate future -- a question of weeks or at most a couple of months, observers say.

The outgoing government has refused a bridge loan for the flailing company, saying a deal must be in place before more money can be granted.