Page last updated at 10:14 GMT, Friday, 19 September 2008 11:14 UK

Consortium withdraws Alitalia bid

Alitalia air hostesses and employees demonstrate at Fiumicino airport near Rome, 17 September 2008
Union protests forced the ailing airline to cancel 40 flights on Wednesday

A consortium of investors proposing to rescue airline Alitalia has withdrawn its takeover offer, raising fears the carrier may go into liquidation.

The Italian group, called CAI, dropped its bid after unions failed to back the deal before a 1400GMT deadline.

Three of Alitalia's nine unions backed the deal, while six had opposed the plans which involved 3,000 job cuts.

Italy's flag-carrier has already warned that it is running out of funds to buy all the aviation fuel it needs.

Making its announcement, CAI said it expressed "profound disappointment".

"Further concessions would inevitably have put the realisation of the plan at risk," it said.

Cancelled flights

"The situation is dramatic," said Italian Prime Minister Silvio Berlusconi after the latest development. "We could be facing an abyss."

Italian Labour Minister Maurizio Sacconi said before the deadline that the future of Alitalia was "hanging by a thread".

The company is dead and some of my colleagues want to be its undertakers
Head of the UIL union, Luigi Angeletti

The unions opposed to the deal said it was "useless and provocative".

Fabio Berti, head of the ANPAC pilots union - one of the group's that opposed the deal - said unions were now looking to administrator Augusto Fantozzi to resolve the situation .

Protests by those opposed to the deal forced Alitalia, which is losing 2.1m euros ($3m; 1.7m) daily, to cancel 40 flights on Wednesday.

The head of the UIL union, Luigi Angeletti, attacked those unions that rejected the CAI offer.

"The company is dead and some of my colleagues want to be its undertakers," he said.

Government role

Under the CAI rescue proposal, the Italian consortium had put forward a 1bn-euro offer for the airline.

It wanted Alitalia to merge with Air One, the country's second-largest airline, while its 1.2bn-euro debt would be absorbed by a second firm, which would then be liquidated.

Prime Minister Silvio Berlusconi has pledged to do all he can to save Alitalia, in which the Italian government holds a 49.9% stake.

In April, plans for the airline to be taken over by France-KLM collapsed when unions refused the accept the terms of the deal.

Alitalia suspended trading in its shares in June and filed for bankruptcy protection last month.

Progress in move to save Alitalia
15 Sep 08 |  Business
Alitalia 'running out of fuel'
13 Sep 08 |  Europe
Alitalia rescue deadline extended
12 Sep 08 |  Business

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