Deadline looms for Alitalia deal

Union protests forced the ailing airline to cancel 40 flights on Wednesday

A consortium of investors has warned Italian trade union leaders they have just hours to accept a rescue plan for failed national airline, Alitalia.

The consortium said if the acceptance did not come before an investors’ meeting at 1400GMT on Thursday, the package would be withdrawn.

The deal would include longer working hours and 3,000 job cuts.

Union protests forced Alitalia, which is losing 2.1m euro ($3m; £1.7m) daily, to cancel 40 flights on Wednesday.

The carrier, which is operating under a bankruptcy commissioner, faces liquidation if a deal is not reached.

The airline says it is running out of money to buy aviation fuel.

Under the rescue proposal, the Italian consortium has put forward a 1bn euro offer for the airline.

Alitalia would merge with Air One, the country’s second largest airline, and its 1.2bn euro debt would be absorbed by a second firm, which would then be liquidated.

Disgruntled pilots

Italy’s four main union organizations – CGIL, CISL, UIL and UGL – have already signed up to the agreement with the consortium CAI, but five other unions have rejected the deal as “useless and provocative”.

The new Alitalia would employ about 12,500 people

Those opposed to the package – SDL, ANPAC, UP, ANPAV and Avia – include pilots and cabin crews.

The new Alitalia would employ about 12,500 people including 1,500 pilots, 3,300 cabin staff and 7,650 technicians, workers and managerial staff, Italy’s Ansa news agency reported.

Prime Minister Silvio Berlusconi has pledged to do all he can to save Alitalia, in which the Italian government holds a 49.9% stake.

In April, plans for the airline to be bought by Air France-KLM collapsed.

Alitalia suspended trading in its shares in June and filed for bankruptcy protection last month.

Alitalia crisis meetings restart

Time is running out to save Alitalia

Emergency talks to prevent the collapse of Alitalia have restarted in Rome after the airline warned it may have to start canceling flights from Monday.

With the airline saying it is running out of money to buy aviation fuel, the government needs to persuade unions to back a deal that involves job cuts.

The only offer on the table is from Italian consortium CAI, which only wants Alitalia’s profitable operations.

Unions have so far rejected this deal as it would mean major job losses.

Yet with the only alternative now increasingly looking like Alitalia’s total collapse and the loss of all 20,000 jobs, the unions now appear more willing to back down.

‘Cautiously optimistic’

“We are trying to get a solution to this saga and there are still many obstacles, but the climate is different and there is the awareness that there is no alternative to the deal,” said Giuseppe Caronia, head of the UILT union.

“I am moderately and cautiously optimistic.”

Prime Minister Silvio Berlusconi has pledged to do all he can to save Alitalia.

Securing the airline’s future was one of his main election pledges before he returned to power in May.

Failed French takeover

Back in April, plans for Alitalia to be bought by Air France-KLM collapsed due to union opposition to planned job cuts.

Italy’s civil aviation authority said on Saturday that Alitalia’s operating licence was at risk due to the airline’s admission that it was running out of funds to buy fuel.

Alitalia is currently being run by administrators after seeking bankruptcy protection on 29 August.

The Italian government owns a 49.9% stake in Alitalia, but it cannot simply pump public funds into the airline as there are strict European Union rules preventing state support for airlines.

Alitalia ‘running out of fuel’

Negotiations with unions will be critical to saving the airline

Italy’s troubled national airline, Alitalia, cannot guarantee flights beyond Sunday because of a lack of funds to buy fuel, a top official says.

“Until the end of tomorrow, flights are guaranteed. From Monday, they are not,” Augusto Fantozzi, Alitalia’s bankruptcy administrator, told unions.

Mr Fantozzi was speaking as he called the unions to emergency talks a day after the latest session broke down.

Prime Minister Silvio Berlusconi blamed “political” motives for the failure.

He said he would do all he could to save Alitalia from collapse.

“The executive is always ready… to give all the possible support to get to the only solution possible to avoid the airline going bust,” he told the Italian news agency Ansa.

Italian investment consortium CAI, which was poised to take over the company’s profit-making parts, walked away from talks with the unions on Friday, accusing them of intransigence.

CIA chief executive Rocco Sabelli said on Saturday it was not ready to make any further concessions.

Italy seals Libya colonial deal

Mr Berlusconi (left) and Col Gaddafi shook hands

Italian Prime Minister Silvio Berlusconi has signed an agreement to pay Libya $5bn as part of a deal to resolve colonial-era disputes.

Libyan leader Col Muammar Gaddafi said the settlement signed in the city of Benghazi opened the door to partnership between the two states.

Mr Berlusconi said the deal, which sees the money being released over 25 years, ended “40 years of misunderstanding”.

Libya was occupied by Italy in 1911 before becoming a colony in the 1930s.

The former Ottoman territory became an independent country in 1951.

This is the first African country to be compensated by a former colonial master.

The question is, she adds: will this latest move set precedents for other former African countries to follow suit?

Coastal motorway

Mr Berlusconi explained that $200m would be paid annually over the next 25 years through investments in infrastructure projects, the main one being a coastal motorway between the Egyptian and Tunisian borders.

The headless statue was displayed when the two leaders met

There will also be a colonial-era mine clearing project.

As a goodwill gesture, Italy also returned an ancient statue of Venus, the headless “Venus of Cyrene”, which had been taken to Rome in colonial times.

The settlement was a “complete and moral acknowledgement of the damage inflicted on Libya by Italy during the colonial era”, the Italian prime minister said.

“In this historic document, Italy apologises for its killing, destruction and repression against Libyans during the colonial rule,” Col Gaddafi said for his part.

The agreement was signed in the Benghazi palace which once housed the Italian colonial administration, Reuters news agency reports.

Rome and Tripoli have spent years arguing over compensation for the colonial period.

Mr Berlusconi’s one-day trip was his second since June when illegal immigration from Africa to Europe was the key issue of talks.

Italy has been swamped by thousands of African migrants trying to reach its shores by boat.

Libya has come in from the diplomatic cold since 2003 when it abandoned efforts to acquire weapons of mass destruction.

Next week, US Secretary of State Condoleezza Rice is scheduled to make the first high-ranking American visit to Libya since 1953.

Alitalia seeks bankruptcy measure

Negotiations with unions will be critical to saving the airline

Troubled Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival.

The carrier has sought court protection from its creditors, effectively declaring itself insolvent.

An administrator will be appointed to handle the process, with flights continuing while the firm plans a radical overhaul of its operations.

Losing 2m euros (£1.6m) a day, Alitalia has survived on a 300m-euro state loan.

Plans are being drawn up to split the carrier into two and to sell a stake in a new entity to a foreign airline.

Split in two

Guaranteeing the airline’s future will depend on securing fresh investment and persuading its unions to accept large job cuts.

Both Air France KLM and Lufthansa have expressed interest in investing in any new entity which emerges from the current business.

No one can buy Alitalia in the state it’s in… the business is toast Roberto Colaninno

Earlier on Friday, Corrado Passera, head of the airline’s financial advisers Intesa Sanpaolo, confirmed that Alitalia’s board was drawing up a request to seek bankruptcy protection.

The move will give the firm breathing space to reach agreement on how the business can proceed.

The government adopted new measures on Thursday aimed at speeding up bankruptcy proceedings, widely interpreted as a signal that Alitalia was set for such a course of action.

Future plans for the carrier would see it divided in half, with its loss-making operations remaining under bankruptcy protection and potentially being liquidated.

Profitable short-haul routes would be separated into a new business, controlled by a consortium of Italian investors including budget airline Air One which would effectively be merged with Alitalia.

Italian media have speculated that the new firm will employ 7,000 fewer staff than Alitalia’s current 19,000 strong workforce and operate flights to about 50 fewer destinations.

Italian ownership

Prime Minister Silvio Berlusconi has made Alitalia’s continued ownership by Italian interests a precondition of any rescue deal.

However, experts have said the airline – of which the government owns 49% – can only survive in the future as part of some European alliance.

Silvio Berlusconi wants to keep the airline in Italian hands

Previous attempts to sell the business to a foreign airline have foundered over union concerns about job losses and unease over the severity of the airline’s financial problems.

The airline’s perilous position was put into perspective by Roberto Colaninno, appointed to take charge of the new entity that emerges from the restructuring.

“No one can buy Alitalia in the state it’s in,” he told La Repubblica newspaper.

“With all respect, I am not Merlin the magician. The business is toast. It doesn’t exist any more. There’s nothing left.”

Alitalia has been crippled in recent years by strategic indecision, poor industrial relations and soaring fuel costs.

Its shares were suspended earlier this summer while the firm has delayed the release of its 2007 accounts.

Italy to seal Libya colonial deal

Mr Berlusconi is making his second trip to Libya since June

Italy is to provide billions of dollars to Libya as part of a deal to resolve colonial-era disputes, Italian PM Silvio Berlusconi has announced.

At least $5bn will go to help Libyan infrastructure projects over the next 25 years.

Mr Berlusconi is in the port of Benghazi to meet Libyan leader Col Muammar Gaddafi and seal a bilateral friendship and cooperation accord.

Libya was occupied by Italy in 1911 before becoming a colony in the 1930s.

It became independent in 1951.

Motorway

Mr Berlusconi said: “The accord will provide for $200m a year over the next 25 years through investments in infrastructure projects in Libya.”

The main project will be a coastal motorway between the Egyptian and Tunisian borders.

There will also be a colonial-era mine clearing project.

The Italian leader had earlier said he wanted the agreement to “turn the page on the past”.

Rome and Tripoli have spent years arguing over compensation for the colonial period.

Libya has accused Italy of killing thousands of its citizens and expelling thousands more from their homes in three decades of occupation.

Mr Berlusconi’s trip is his second since June when illegal immigration from Africa to Europe was the key issue of talks.

Italy has been swamped by thousands of African migrants trying to reach its shores by boat.

Libya has come in from the diplomatic cold since 2003 when it abandoned efforts to acquire weapons of mass destruction.

Next week, US Secretary of State Condoleezza Rice is scheduled to make the first high-ranking American visit to Libya since 1953.