Union backing resurrects Italian Alitalia bailout

Four major unions, including Italy's biggest, threw their support behind an investor bailout of flag carrier Alitalia, breathing…

Four major unions, including Italy's biggest, threw their support behind an investor bailout of flag carrier Alitalia, breathing life into a deal that seemed all but dead and averting the risk of grounded flights for now.

The deal brokered by the government yesterday between the unions and the CAI investor group was enough to prevent Italy's civil aviation authority ENAC from revoking Alitalia's provisional licence to fly.

"There's been a step forward and therefore the provisional licence is not at risk," said ENAC chief Vito Riggio.

The developments were the first breakthrough in a flurry of talks over the past week to salvage the takeover after CAI yanked its offer because of union opposition and left Alitalia with the prospect of winding up after 60 years of flying.

CAI has now agreed it will keep its bid valid until October 15th, bankruptcy commissioner Augusto Fantozzi told a news conference after talks with unions at the prime minister's office.

"A social and economic tragedy for the entire country has been averted," said Luigi Angeletti of the Uil union, which backed the rescue along with Cisl, Ugl and Cgil, the last being Italy's biggest and which had so far rejected the plan.

However, the eventual success of CAI's plan still depends on attracting support from a foreign airline, which the group has said would be needed to make its project for Alitalia viable.

French newspaper Les Echos reported that Air France-KLM could take 10 per cent to 20 per cent in the CAI consortium.

This echoes the stance the Franco-Dutch carrier had reportedly taken before talks between CAI and the Italian government were suspended, though some reports have said it was in talks to take as much as a 25 per cent stake.

Suffering from high fuel prices and economic downturn which have hit the airline sector globally, Alitalia has been on the brink of collapse for years as political interference and labour unrest bled it of cash and caused it to pile up debt.

An Alitalia rescue would be a political triumph for Prime Minister Silvio Berlusconi, who made an election vow to save the flag airline and keep it Italian. His top aide and key ministers presided over talks yesterday.