(Adds details throughout)
By Alberto Sisto and Deepa Babington
ROME, April 2 (Reuters) - Air France-KLM walked away from its planned takeover of Alitalia after talks with the near-bankrupt Italian carrier’s unions broke down on Wednesday.
Alitalia AZPIa.MI said Chairman Maurizio Prato resigned, and called an extraordinary board meeting to decide its next move.
Air France-KLM (AIRF.PA) said it regretted the breakdown in talks but conditions did not exist for further negotiations.
The French carrier abandoned talks after rejecting union demands to maintain Alitalia’s 51 percent stake in its troubled ground service unit, speed up plans to buy new planes and keep its cargo unit open in coming years, union sources said.
“This company is cursed: only an exorcist can save it,” Prato was quoted by unions as saying.
Air France-KLM had made union support a condition for wrapping up the deal, and Alitalia has said any further delays in talks would worsen its already precarious finances.
Italy’s economy minister overseeing Alitalia’s sale had warned earlier that its only alternative to the deal was emergency administration, during which an administrator is put in charge and decides whether the company can be restored to health or must shut operations.
Though it was approved by the outgoing government selling the Italian state’s 49.9 percent stake in the carrier, the takeover came under a maelstrom of criticism from Milan’s airport operator and opposition leader Silvio Berlusconi.
Italy’s cabinet may hold an emergency meeting on Alitalia on Thursday, a union official said.
Right-wing politicians — campaigning for an April 13-14 election and opposed to the deal because it would maintain fewer operations at Milan’s main airport, Malpensa — rejoiced.
“News that Air France has abandoned the talks, hopefully for good, is very positive — that deal was neither positive for Alitalia nor for Malpensa,” said Northern League leader Roberto Maroni, a Berlusconi ally.
Shares of Alitalia, which loses more than one million euros a day and has a net debt of 1.37 billion euros, closed down 5.7 percent to 0.50 euros. They have been suspended for much of the past two weeks.
Wednesday’s talks between Air France-KLM and Alitalia’s unions were the latest in a series of meetings that union officials had variously described as stalled or characterised by “timid openings” at best.
Air France-KLM began by offering to reconsider in 2009 its decision to shut Alitalia’s cargo unit, review speeding up plans to buy new planes and let its Atitech unit go on providing heavy maintenance work beyond 2010, union sources at the meeting said.
But the unions demanded more. Spinetta had told unions he would take their proposal to his board, but doubted it would be accepted, the union sources said.
Air France-KLM had previously offered to take on more ground service workers at Alitalia than initially planned, but wanted to cut the carrier’s stake in the AZ Servizi unit to well below 51 percent. It also planned to shut the cargo unit in 2010.
Economy minister Tommaso Padoa-Schioppa earlier had ruled out a bid for the airline by private Italian businessmen — as suggested by Berlusconi — calling it “impossible” and not a solution for an airline in need of deep restructuring.
“If the Air France-KLM offer falls apart, we would be left without the only takeover offer,” Padoa-Schioppa told a parliamentary hearing on Alitalia, which has exploded into a top issue ahead of Italy’s April 13-14 general election.
“It would be bitter destiny if the company, dragged down for years because of a perverse relationship with politics, got its mortal blow from exploitation for election purposes or from the lack of a deal with unions.” (Editing by Quentin Bryar, Sue Thomas, Andrew Hurst, Gary Hill)