September 20, 2008 / 12:23 PM / 9 years ago

Berlusconi warns Alitalia now risks bankruptcy

ROME (Reuters) - Alitalia AZPIa.MI remained airborne on Saturday but Prime Minister Silvio Berlusconi ruled out any last-minute rescue by a foreign airline and said Italy’s flag carrier could be headed for bankruptcy.

<p>Alitalia workers listen to union leaders during a meeting at Fiumicino airport in Rome September 18, 2008. REUTERS/Chris Helgren</p>

“There is no possibility of another rescue bid so it could be that our Alitalia is heading towards bankruptcy procedures,” said Berlusconi, whose attempt to rally an Italian consortium to salvage the airline tripped this week on trade union opposition.

Alitalia flights were operating normally but may be grounded in a matter of days, and the airline liquidated, if there is no last-minute reprieve for talks between trade unions and the CAI consortium, which withdrew its offer on Thursday after pilots and flight attendants refused to accept its conditions.

Suffering from high fuel prices and an economic downturn that has hit airlines globally, Alitalia has been on the brink of collapse for years as political interference and labor unrest bled it of cash and caused it to pile up debt.

The government rules out further state aid or, as some leftists propose, the denationalization of Alitalia. Italy is already in trouble with the European Commission over a 300 million euro ($435.2 million) loan to keep the airline flying.

Berlusconi returned to power in May promising to rescue the airline, in which the state owns a 49.9 percent stake, and keep it in Italian hands. He had opposed an offer for Alitalia by Air France-KLM (AIRF.PA) under the previous centre-left government.

Union chief Guglielmo Epifani suggesting Alitalia should now be “sold to a big international airline”.

<p>Alitalia workers leave at the end of a protest against the sale of the Italian airline at Fiumicino airport in Rome September 18, 2008. REUTERS/Alessandro Bianchi</p>

NO FOREIGN INTEREST

But Alitalia’s special administrator, Augusto Fantozzi, said this week he had contacted Air France (AIRF.PA), Lufthansa (LHAG.DE) and British Airways BAY.L about buying the airline or its assets but they had all declined to make an offer.

Slideshow (5 Images)

“The other big flag carriers aren’t interested in getting Alitalia out of trouble,” media mogul Berlusconi said in an interview broadcast on one of his own television channels.

Alitalia has been operating under bankruptcy protection since the end of August and Fantozzi meet Italy’s civil aviation authority ENAC on Monday to see if it can retain its operating license. ENAC has said that if there is no feasible rescue plan, Alitalia’s planes will be grounded within a week to 10 days.

The liquidation of Alitalia would be a political blow to Berlusconi, who is riding high in opinion polls thanks to the decisive way in which he resolved Naples’ rubbish crisis and has cracked down on street crime and illegal immigrants.

Facing the prospect of liquidating a symbol of national pride, sacking its 19,000 workers and seeing its slots go to foreign airlines, Berlusconi pinned the blame for the airline’s predicament squarely on the pilots and flight attendants.

“Soon the pilots and flight attendants will realize there’s no alternative,” he said. “I think the Italian people will be able to judge who is to blame if we don’t find the solution immediately that I am still hoping for.”

Writing by Stephen Brown; additional reporting by Massimiliano DiGiorgio and Giancarlo Navach; editing by Christopher Johnson

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