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Silvio Berlusconi Backs Rival Bid for Alitalia

Silvio Berlusconi, tipped to become Italy's prime minister after April's election, has backed a rival Italian bid to Air France-KLM's offer for Alitalia, sending the stricken airline's shares soaring.

The media mogul said late on Wednesday as he left a birthday party that the French carrier would pull out and leave the field free to Alitalia's local rival, Air One, to return with a new offer backed by banks, and possibly even by his sons.

"Even Greece and Portugal have a national airline, one can't just give up Alitalia," said Berlusconi. "I've been silent but I spoke when I saw the unacceptable (Air France-KLM) conditions."

But Berlusconi, Italy's third richest man, said on Thursday that neither he nor his holding company had any interest in bidding for Alitalia, which loses more than a million euros a day and is just a few months away from running out of cash.

Political rivals and one Alitalia union dismissed the talk as election rhetoric and asked where the eleventh-hour rival bid was. Alitalia's chairman, talking to unions, warned that any bid backed by banks would weigh on the near-bankrupt carrier's debt.

"If there were Italian businessmen capable of saving Alitalia, why didn't they come out earlier?" asked Berlusconi's one-time ally turned rival Pier Ferdinando Casini.

Berlusconi's comments further complicate Air France-KLM's plans to buy Alitalia, already in danger of falling apart due to a maelstrom of criticism from unions, politicians and Milan's airport operator SEA.

SEA refuses to drop a $2 billion lawsuit against Alitalia over its plans to halve flights of Milan's Malpensa airport.

The Franco-Dutch carrier has warned it will walk away if all obstacles to the deal are not resolved in two weeks and wants the winner of Italy's election -- who opinion polls suggest is likely Berlusconi -- to sign off on it as well.

The stock market rejoiced. Shares in Alitalia were suspended in Milan in early trading after investors bid about 60 percent more than Wednesday's closing price, or as much as 0.5 euros.

Take-It-Or-Leave-It-Offer

Privately-owned Air One, whose 1 euro cent a share bid for Alitalia was overlooked by Italy's government in December in favour of the French bid, did not have an immediate comment.

The airline unsuccessfully challenged in court Air France-KLM's exclusive talks to acquire Alitalia but has never officially given up the fight to buy its larger rival.

Italy's biggest retail bank Intesa Sanpaolo, which Berlusconi said would decide on backing the rival bid, denied it had any plans to discuss Alitalia at its board meeting on Thursday to approve its 2007 results.

The Air France-KLM offer for the nearly bankrupt Italian airline values its shares at 0.1 euros each, but also includes a bond buy-back and a 1 billion euro capital increase.

Italy's economy minister -- speaking to Alitalia staff aboard a flight to Milan -- raised the spectre of the government having to step in and appoint an official to run the airline if the Franco-Dutch deal fails.

Alitalia Chairman Maurizio Prato told unions at a Thursday meeting that the Franco-Dutch carrier's bid was essentially a "take-it-or-leave-it offer" -- leaving little room for changes sought by unions and politicians.

The unions are angry at Air France-KLM's plans to slash or exclude from the deal nearly a third of the carrier's workforce, but plan to attend further talks with the carrier's CEO Jean-Cyril Spinetta on March 25, a union official said.

Despite the unions' unhappiness with Air France-KLM's offer, the UIL Transport union dismissed Berlusconi's comments.

"It's better to go ahead with Air France-KLM," said Giuseppe Caronia, the union's secretary-general. "We can't take the risk of letting Alitalia go bankrupt."