20 Sep 2008

Alitalia cancels flights as liquidation looms

7:21 am on 20 September 2008

Italy's national airline Alitalia has cancelled about 20 flights from Rome's Fiumicino airport, increasing fears that the carrier may soon go into liquidation.

The airline blamed the cancellations on normal operational reasons rather than a lack of cash to buy fuel - something which could lead aviation authorities to ground its planes.

On Thursday, a group of Italian investors withdrew their offer to buy profitable parts of the airline after six of the Alitalia's nine unions refused to accept the 3,000 job losses and salary cuts it proposed.

The government said the only hope was if the consortium, CAI, put its offer back on the table and unions accepted the terms.

There were also reports on Friday that Italy's civil aviation authority may ground all Alitalia planes within 10 days from Monday unless the airline can show a new rescue plan.

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 Air France-KLM collapsed when unions refused to accept the terms of the deal.

Alitalia shares were suspended in June and the airline is being run by a special administrator following its move into bankruptcy protection last month.