15 Sep 2008

Financial problems may ground Alitalia planes

3:51 pm on 15 September 2008

Italy's national airline, Alitalia, may have to ground planes from Monday as it cannot secure fuel from wary suppliers, due to a lack of funds, a senior official has warned.

Alitalia's bankruptcy commissioner, Augusto Fantozzi, made the comments as he called unions to emergency talks a day after the latest session broke down.

He has held off from winding up the airline but said on Saturday situation was "plummeting".

Unions have rejected the terms of a takeover by Italian investment consortium CAI, which would have meant thousands of job cuts and lower pay as the airline would have been reborn as a smaller carrier, stripped of loss-making operations and debt pile.

Mr Fantozzi has said the only alternative to the rescue plan is liquidation.

Italian Prime Minister Silvio Berlusconi called airline unions to emergency talks on Saturday evening in a last-ditch effort to save national flag carrier Alitalia from collapse.

Letting Alitalia collapse would be a huge political blow for Mr Berlusconi who promised voters who returned him to power this year that he would use his business contacts to find an Italian buyer for the near-bankrupt airline.

Once a symbol of Italy's post-war boom, Alitalia has for years suffered from political interference, labour disputes, financial woes and most recently from soaring fuel costs - which are taking down other airlines around the world.

The airline has not been in profit since 1999 and had nearly 1.2 billion euros of debt as of July.

With Alitalia unable to secure fuel supplies, civil aviation authority Enac said its licence was in jeopardy.

The consortium, CAI, has not withdrawn its takeover offer, but said it would not make additional concessions to employees.

Britain's third-biggest package holiday operator, XL Leisure Group, grounded all flights on Friday after going into administration. Discount transatlantic carrier Zoom Airlines began bankruptcy proceedings last month.