Crunch talks for ailing Alitalia

Alitalia's future depends on crucial rescue talks in Rome

Talks are under way in Rome to try to save the bankrupt Italian airline Alitalia from collapse.

Unions are meeting the Italian government-backed investor group CAI that is leading the rescue bid for the stricken airline.

Alitalia, which is losing more than 2m euros ($2.8m;£1.6m) a day, is surviving on a state loan of 300m euros.

But the company's nine unions are divided over whether or not to back CAI's plan.

Everyone is well aware that the only alternative is the failure of the company Maurizio Sacconi, Italian Welfare Minister

The CAI's aim is to takeover Alitalia's best assets and relaunch the airline as a smaller carrier with fewer staff.

Job cuts

Some union leaders have warned they would reject deep job cuts among the group's 20,000-strong workforce. Analysts said between 5,000 and 7,000 jobs could be lost.

Welfare Minister Maurizio Sacconi warned that there were few options left for the cash-strapped carrier.

"I am hopeful because everyone is well aware that the only alternative is the failure of the company with all the consequences for the workers and the country in general."

The head of the CISL union Raffaele Bonanni said his union was prepared to sign the deal if certain conditions were met.

The CISL wants new investors to commit to staying with Alitalia for at least five years.

Under the state-backed rescue plan, profitable short-haul routes would be separated into a new business. The unprofitable ground services and cargo businesses would be sold off or wound down.

Alitalia's fate has proved a headache for previous and current governments.

Italy's former leader Romano Prodi tried and failed to auction the government's controlling stake in the airline. A later attempt to sell the stake to Air France-KLM collapsed after unions blocked the deal.

Italian ownership

Prime Minister Silvio Berlusconi has said he wants Alitalia to remain in Italian hands.

Two weeks ago, the government declared the airline bankrupt to give the firm breathing space to agree a fresh rescue plan.

Alitalia's problems have been compounded by poor industrial relations and soaring fuel costs.

The minister charged with overseeing the firm's bankruptcy said the two sides must reach a deal by Friday.