An Italian court will decide on February 20 whether to annul Air France-KLM's right to exclusive talks to buy Alitalia, judicial sources said, putting any potential deal or new offer for the airline on hold until then.
An administrative court in Lazio province reviewing a lawsuit filed last month by Alitalia's domestic rival Air One asked groups cited in the suit to hold off on any actions that change the current state of play until the February 20 hearing.
That would imply that Air France-KLM, which began exclusive talks to buy Alitalia last month, cannot conclude a sale before that date and Air One, which wants to make a fresh bid for the airline, cannot present the new offer until then.
Air One's previous offer was rejected by the outgoing Italian government in favor of the one made by Air France-KLM, whose talks with the loss-making airline are expected to last until mid-March.
With Italy set to go back to the polls in mid-April after the collapse of Prime Minister Romano Prodi's government last month, doubts have risen about whether the sale to Air France-KLM will go through.
Prodi's government launched Alitalia's sale in December 2006 by putting up for sale the Italian state's 49.9 percent stake in the carrier.
Prodi's Infrastructure Minister Antonio Di Pietro on Tuesday said it would be inappropriate for a fallen government to approve a deal on Alitalia.
"Even if correct from a formal point of view, I believe it would be inappropriate that an operation of such importance would be pushed through by a government that is expiring, or in fact, expired," Di Pietro told reporters at an event in Milan.
Air France-KLM had snubbed the first sale process, saying it would only be interested if Alitalia's business turned around.
But after Alitalia announced a drastic "survival" plan of job cuts and flight reductions, Air France-KLM officially joined the sale process in December 2007.
Alitalia remains attractive despite its losses because of the lucrative Milan to Rome route, where it holds a near monopoly.
The prospect of Air France-KLM taking over Alitalia has met fierce opposition from politicians and business leaders in northern Italy over fears that the region's main airport will lose its importance, helping Air One's push for a fresh bid.
Even the manager of Milan's Malpensa Airport has filed a lawsuit seeking damages over Alitalia's plans to reduce its flights there and refocus on its hub in Rome, the Italian news agency Ansa said.
Alitalia Chairman Maurizio Prato told reporters earlier it would respond with a lawsuit of its own against the airport operator Sea for losses stemming from a lack of development at the airport.
Alitalia plans to more than halve its slots at Malpensa to 170 daily from 350, the head of the airline's passenger and cargo division told a news conference on Tuesday.
Air France-KLM, meanwhile, plans to start meetings Alitalia's unions sometime between February 15 and February 20, Prato said.
Air One has won the backing of Italian bank Intesa Sanpaolo, and local newspapers have reported a growing number of business leaders willing to help with its new bid.
The latest one to lend its support was UCIMU, an association of machine tool manufacturers, nearly all of whose members are based in northern Italy.
But one local politician warned that time was running out for them to find an alternative solution for Alitalia's future.
"We can't allow ourselves to prolong this and bring about Alitalia's collapse," Filippo Penati, head of the province of Milan, told reporters at an event on Tuesday.
Alitalia is losing more than EUR1 million euros a day and executives warn it will need a cash injection of at least EUR750 million (USD$1.11 billion) to keep flying solo should it not be bought by the middle of this year.
The prospect of another bid has been pushing Alitalia shares higher. They were up nearly 3 percent to their highest since January 21 in morning trade on Tuesday before turning negative to close down 2 percent amid a broader market slide.
