Nov 1, 2008

Business - Alitalia gets last-minute rescue

An Italian investors' group has said it will go ahead with a rescue offer for the airline Alitalia, despite the lack of agreement with some trade unions.

The group, the Cai, said it had made a binding offer - shortly after walking out of negotiations over the airline.

Talks had earlier broken down because only four out of Alitalia's nine unions had agreed to the Cai's terms.

The Cai had set a Friday night deadline for a deal to be reached over securing Alitalia's future.

Without a binding rescue offer, Alitalia would have been forced to seek new funding within weeks to keep itself going - or risk bankruptcy.

The investors, the Compagnia Aerea Italiana (Cai), have been holding lengthy talks with Alitalia's trade unions over job cuts and other savings.

The unions had accepted Cai's takeover of Alitalia in principle - but the airline's pilot and flight staff unions have not agreed to the Cai's detailed terms

Bankruptcy risk

The Cai group's earlier decision to walk away from the talks was the second time it had pulled back from making a bid, threatening the future of the cash-strapped carrier.

During the lengthy talks, both sides accused the other of being inflexible.

The Cai had always stressed that union backing was a pre-requisite for making a binding offer.

The group has pledged to inject more than 1bn euros ($1.27bn; £789m) into Alitalia and merge it with Italy's much smaller Air One airline.

"Everything is ready as far as Cai is concerned to complete a very difficult rescue," said Corrado Passera, the CEO of the Italian bank Intesa Sanpaolo, which helped draft the rescue plan.

The negotiations have been chaired by Gianni Letta, a senior aide to Prime Minister Silvio Berlusconi.

Mr Letta had warned the unions that the only alternative to the deal for Alitalia would be bankruptcy.

Keeping Alitalia alive was one of the main election planks on which Mr Berlusconi ran for office in April, and his government has since rewritten the bankruptcy laws to pave the way for a bail-out by the Cai consortium.

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