Alitalia Could Extend Talks, Unions Approve


Alitalia's board will discuss extending talks with unions on its takeover by Air France-KLM, a company source said, as the French carrier's promise to soften the blow on workers met with approval from major unions.

** FILE ** An Alitalia Boeing 777 is parked at Leonardo da Vinci International Airport in Rome, in this Aug. 27, 2002 file photo. The European Union is likely to approve Italy's plan to bail out state-controlled airline Alitalia with a euros 400 million (US$488 million) bridge loan, EU Transport Commissioner Loyola de Palacio told reporters Tuesday, July 13, 2004 after meeting with Italian ministers. (AP Photo/Massimo Sambucetti/FILE)
Massimo Sambucetti

More than a week after agreeing to buy the ailing carrier, Air France-KLM appeared to have broken an initial stalemate with unions by offering on Tuesday to modify its plans on job cuts and continue talks beyond a March 31 deadline.

"The opening of dialogue with Air France-KLM, giving up its talk of an ultimatum, is the first result we've obtained," the UGL union said in a statement. "But it's obvious that there is work to be done so the final verdict can't be taken as a given."

The leader of the CISL union, Raffaele Bonnani, a vocal critic of the deal, also hailed the Air France-KLM concessions.

Alitalia shares were suspended for the second day in a row for excessive gains, and were indicated up nearly 20 percent.

Alitalia will discuss approving the talks extension at a Wednesday board meeting, a company source said. But its chairman was earlier quoted by unions as saying the Italian Treasury was against the move, leaving the fate of any extension unclear.

The Treasury holds a 49.9 percent stake in Alitalia, whose fate has become a hot issue in election campaigning ahead of the April 13-14 vote.

Media magnate Silvio Berlusconi -- who spurred a sharp rally in Alitalia shares last week by raising the prospect of an Italian counterbid -- claimed victory on Wednesday, saying Air France-KLM's concessions to unions were spurred by his comments.

"I note that we have obtained success after I launched my appeal to Italian businessmen to show their pride and not lose control of the national carrier," he told Italian television.

Lucrative Bet

The Franco-Dutch carrier had earlier insisted it would throw in the towel if unions and other stakeholders did not drop their resistance to the deal by March 31, but appeared to soften its stance on the deadline and job cuts at a meeting with unions.

Despite Alitalia's long list of troubles -- from difficult labor unions to tough competition from low-cost carriers – the airline controls the lucrative Milan to Rome route and offers a foothold in Italy, where millions of tourists arrive each year.

Air France-KLM is betting it can restore the carrier -- which it is picking up for just two days' worth of revenues in a share swap offer -- to a profit in just two years. It will also buy back bonds and pump in 1 billion euros in a capital hike.

But it still faces opposition from Milan's airport operator, which has filed a $2 billion lawsuit against Alitalia over plans to cut flights at Malpensa airport, and a potential veto from Italy's next government should Berlusconi win.

Though an Italian consortium to rival Air France-KLM's bid has yet to reveal itself, British airport transfers company Terravision said it would be interested in joining such a group.

Alitalia's smaller domestic rival Air One, whose offer to buy the carrier was rejected by Italy's outgoing government, has said it is ready to launch a new offer, but needs three or four weeks to inspect the ailing carrier's books first.

Air France-KLM's modified proposal on job cuts at Alitalia will be sent to the unions after a Thursday board meeting. It resumes talks with the labor groups on Friday.