Page last updated at 16:06 GMT, Friday, 12 September 2008 17:06 UK

Alitalia rescue deadline extended

Alitalia plane
Alitalia is technically insolvent

The Italian government has given Alitalia unions one more day to agree a rescue plan with investors group CAI.

The newly commissioned administrator of the airline had previously said that if a deal could not be reached then it would liquidate all its assets.

Despite round the clock discussions, talks broke down overnight and there are no plans for them to start again.

Government said it was committed to avoid "irreversible acts" and extended the deadline to the end of Friday.

Insolvent

The situation is worrisome. Everybody should realize the only other possibility is failure.
Italian Labour Minister Maurizio Sacconi

Union officials hoped to return to the negotiating table later on Friday despite "insurmountable difficulties".

They are thought to oppose the scale of job losses, terms of work contracts and salary cuts.

Earlier a spokesman for the Italian investors group said: "CAI notes that, after seven days of meetings, conditions are not right to continue talks with unions on the execution of the Alitalia rescue plan."

But it has not withdrawn its proposed rescue package, which includes spinning-off profitable short-haul routes into a new business.

The unprofitable ground services and cargo businesses would be sold off or wound down.

It is thought Alitalia is losing about 2m euros every day and effectively declared itself insolvent last month when it sought court protection from its creditors.

Running out of time?

Italy's unions have enormous clout and ultimately prevented Air France-KLM from buying the Italian government's 49.9% stake in the national carrier earlier this year.

Silvio Berlusconi was elected as the new prime minister on a campaign which featured a pledge not to sell Alitalia to a foreign company or investors.

But Labour Minister Maurizio Sacconi warned the unions involved that this time there was only one solution.

"The situation is worrisome," he said

"Everybody should realize the only other possibility is failure."

Analysts said that whatever happens to Alitalia now, there would be political fallout.




SEE ALSO
Crunch talks for ailing Alitalia
11 Sep 08 |  Business
Alitalia running out of money
11 Sep 08 |  Business
Alitalia seeks bankruptcy measure
29 Aug 08 |  Business
EU court rules against Alitalia
09 Jul 08 |  Business
Brussels to study Alitalia loan
11 Jun 08 |  Business

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