THE FUTURE of Italy's ailing state airline Alitalia was hanging in the balance last night, with the airline's administrator, Augusto Fantozzi, suggesting that it might have to start cancelling flights this morning because of problems obtaining fuel.
In a bid to avoid the firm's collapse, the centre-right government, led by media tycoon Silvio Berlusconi, held emergency meetings yesterday aimed at securing an agreement between Alitalia's nine unions and CAI (Compagnia Aerea Italiana), a consortium of 20 investors which has offered €400 million for the airline.
Alitalia, which is 49.9 per cent owned by the treasury, has an abysmal track record. Since its foundation in 1946 it has returned an annual profit only four times.
Its latest financial crisis comes during a period of major uncertainty in the European airline industry. British tour company K&S Travel yesterday became the latest company to collapse - just days after the British XL Leisure Group was forced into liquidation. Alitalia is currently estimated to be losing €1 million a day. But this could be optimistic, since first-half figures for this year show that it lost €400 million. The centre-left government of Romano Prodi, which fell last January, had agreed to sell the airline to Air France-KLM for an overall purchase price of €138.5 million. This was part of a takeover package that envisaged an investment of €850 million over two years and 2,100 job cuts.
However, during this spring's general election campaign Mr Berlusconi strongly opposed this plan, arguing that a takeover by an Italian business consortium would be in the country's interests. Concerned about both the political and commercial implications of the deal, Air France pulled out last April, leaving the way clear for a Berlusconi-sponsored consortium. Having sought bankruptcy protection last month, Alitalia desperately requires the CAI consortium and the unions to reach an agreement. Yet given that CAI's industrial plan envisages perhaps 6,000 lay-offs and a 30 per cent salary cut, no deal has yet been reached.
In the meantime, ENAC, the Italian civil aviation authority, said on Saturday that Alitalia's operating licence might be at risk due to its admission of credit problems.
