Investor Group Walks After Union Rejects Buyout Plan

In a familiar refrain that likely marks one of the last nails in the coffin of Italy's troubled flag carrier, unions at Alitalia SpA rejected a buyout offer put forth by an investment group on the grounds it would cut too many jobs, and cut their pay.

As a result... no one at Alitalia may soon have jobs, period.

Bloomberg reports the investor group led by Roberto Colaninno walked away this week from its plans to purchase a stake in the beleaguered airline, after unions balked at the group's plans to slash 3,250 jobs, and base pay rates on job performance.

"After seven days of meetings, there aren't conditions to continue negotiations," Colaninno's Compagnia Aerea Italiana said Friday in a prepared statement, adding Alitalia's unions "don't seem to realize what a dramatic situation Alitalia is in."

CAI has not formally retracted its offer, but it appears it would take nothing short of a miracle to bring both sides back to the table. No further talks are scheduled.

"The situation is worrisome and getting worse," Labor Minister Maurizio Sacconi said after negotiations came to a contemptuous end. "Alitalia won't be able to operate much longer if there aren't new developments."

As ANN reported, Alitalia filed for insolvency last month, though officials remained optimistic then the so-called "Phoenix" plan put forth by Piaggio CEO Colaninno would manage to save the carrier, albeit at a high price. In addition to the job cuts, Phoenix also called for the sell-off of Alitalia's money-loosing subsidiaries, and merging with rival Italian carrier Air One.

French-dominated Air France-KLM Group submitted a $1.17 billion offer earlier this year to take over Alitalia, which was accepted by the airline's board. The bid followed several attempts by the Italian government to sell off its stake in the troubled airline, including a failed auction involving just two bidders -- Air France-KLM, and Air One.

Though the Air France deal had its merits -- first and foremost, insuring the survival of the Italian carrier -- it also would have meant the French takeover of an Italian airline -- a scenario described as "hard to digest" in one Italian editorial.

One result of that bid's failure was the April resignation of Alitalia CEO Maurizio Prato, who was a fierce proponent of the Air France takeover. Following the unions' rejection of that buyout offer, Prato left in frustration... reportedly calling Alitalia "cursed," adding "only an exorcist" could save it.

Alas, he's probably right... since it now appears likely Alitalia will soon disappear entirely.

"I'm disgusted," said opposition lawmaker Silvio Sircana, who was spokesman for ex-Prime Minister Romano Prodi, the chief proponent of the Air France deal. "There was true political sabotage of the plan to sell Alitalia to Air France, and now the negative consequences of that sabotage are being played out."

FMI: www.alitalia.com/