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Last Updated: Wednesday, 11 October 2006, 11:57 GMT 12:57 UK
EU tells Alitalia not to seek aid
Alitalia plane
Alitalia has been hit by a number of wildcat strikes
Loss-making Italian airline Alitalia should focus on restructuring its operations rather than looking for a state bailout, Brussels has warned.

The comments from European Commission transport spokesman, Michele Cercone, come as the Italian government seeks a rescue plan for the carrier.

Italian Prime Minister Romano Prodi has warned that the airline's finances were "completely out of control".

State aid for airlines is illegal under European Union rules.

Staff unrest

Alitalia - which is 49% state-owned - has been making losses for a number of years in the face of higher fuel bills, increased competition from low-cost rivals, and damaging strikes.

Last year the Italian government gave it a 400m euro ($502m; 270m) loan as part of a previous restructuring plan.

Despite complaints from Alitalia's rivals, Brussels determined that the move did not represent state aid.

The Italian government aims to have its latest rescue plan for Alitalia drafted by 31 January, and has warned that the carrier faces potential bankruptcy.

Mr Prodi is now due to meet with union leaders at the airline to discuss its future.

It comes amid a series of wildcat strikes over existing cost-cutting plans that have forced the carrier to cancel a number of flights in recent weeks.

Air France has been put forward as a potential partner for Alitalia, but the French airline has said it would only be interested if the Italian firm restructuring is successful.

Recovery plan cuts Alitalia loss
28 Feb 06 |  Business
Alitalia raises fresh $445m loan
16 Dec 05 |  Business
Government to Alitalia's rescue
11 Nov 05 |  Business
Alitalia unions agree cost deal
13 Oct 05 |  Business
EU backs Alitalia turnaround plan
08 Jun 05 |  Business

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