Alitalia Official: Time Running Out For Bailout

10/14/2008 05:12 am ET | Updated May 25, 2011

ROME — Alitalia's bankruptcy administrator on Saturday warned unions opposed to a rescue plan that time was running out for saving the Italian carrier, as flights were at risk of cancellation for lack of fuel and some workers would be laid off soon.

Meanwhile, Premier Silvio Berlusconi rushed back to Rome from a southern Italian city to offer his help in breaking the deadlock between a group of investors tapped to take over the company and unions opposed to the plan. He summoned unions and investors' representatives to separate meetings with government officials at the premier's house late Saturday.

Talks between the unions and the investors were suspended Friday when the investors walked away, having failed to obtain the crucial support of Alitalia's nine unions. Each side accused the other of being intransigent.

But the investors' offer remains on the table, leaving the government and the administrator, Augusto Fantozzi, scrambling for a solution as Alitalia edges toward collapse.

"There are difficulties concerning fuel supply, which could endanger some flights," Fantozzi told the unions during their meeting in Rome, according to an Alitalia statement.

Alitalia denied news reports quoting Fantozzi as telling the unions that the company could guarantee flights only until Sunday. But it did say it was becoming more difficult to "ensure ordinary services necessary for flying activities."

"So far we have tried, amid a thousand difficulties, to guarantee regular service," it said.

The ENAC civil aviation agency said in a statement that Alitalia's license to operate was also at risk "if a solution is not found soon that guarantees the continuing of the carrier's operations."

According to Alitalia and union leaders, Fantozzi informed unions that he would start laying off some Alitalia workers _ the crews of 34 aircraft that are not currently being used _ and enroll them in welfare programs. He said he would take all further measures necessary in the face of "the very grave crisis."

"He has explained that we are at a very critical situation," said union representative Roberto Panella. Panella also quoted Fantozzi as saying he would have to begin procedures to terminate employment contracts on Monday.

"We are aware of this urgency," Panella said, calling on the investors to abandon what he said was the rigidity of their position and on the government to intervene.

But the investors insisted they would not make concessions, according to the ANSA news agency. Rocco Sabelli, the man who had been designated to be the chief executive of the new Alitalia, said the group was willing to talk, but added that "on the contracts and on the plan, our position is firm," ANSA said.

Alitalia, which had been losing some $3 million a day, was declared bankrupt on Aug. 29. The move paved the way for the investors to negotiate their plan to buy Alitalia's profitable assets.

The rescue plan reportedly envisages a $1.4 billion investment, the merger with Italy's No. 2 airline, Air One, and a partnership with a foreign carrier.

Among the sticking points in the talks are new contracts, salary cuts and layoffs that might run to 5,000 of the airline's 20,000-strong work force.

Berlusconi, who traveled from Bari to follow the crisis, said he was "very worried" about the situation, and that he could not understand "this suicidal behavior," ANSA reported.

The premier, who has made solving Alitalia a priority of his government, said he was ready to intervene to help break the deadlock.

"The government is always ready with its ministers, and today even with the prime minister, to give all support possible to get to the only solution possible to avert the collapse of the company," Berlusconi was quoted as saying.

On Friday, a few hundred Alitalia workers staged a protest at Rome's Leonardo da Vinci airport, while others gathered outside the company headquarters where Fantozzi was meeting with unions.