Italy's government scrambled to salvage Air France-KLM's collapsed deal to buy Alitalia on Thursday, promising to keep the airline flying despite a looming cash crisis.
The state-controlled carrier, whose fate has become a major campaign issue ahead of Italy's general election in 10 days time, has said its cash will run out in a few months unless a new owner steps in to pump more money into its coffers.
The Italian government said in a statement on Thursday it was committed to ensuring Alitalia stayed in operation, while the economy ministry overseeing its sale urged the airline's board to take urgent action to ensure it keeps flying.
Once a proud symbol of Italy's post-war economic boom, Alitalia has been felled by tough competition, soaring fuel prices and frequent strikes. It has posted a profit only four times in the past 15 years.
The board of Alitalia, in which the Italian state has a 49.9 percent stake, was scheduled to meet on Thursday. Its chairman Maurizio Prato quit on Wednesday saying the company was cursed.
"Alitalia is no longer able to stand on its own two feet," said Edoardo Staunovo Polacco, a bankruptcy law lecturer at Bocconi University. "Either it must be saved by another party or it is inevitable it will go into special administration. It doesn't have any more money and cannot get any from the state."
Some unions and politicians remained hopeful the airline could avert bankruptcy and resume talks with Air France-KLM, which abandoned negotiations with unions on Wednesday after rejecting their demands aimed at saving more jobs.
The Italian government said it would verify whether the French carrier's decision to ditch the deal was final, while Alitalia management summoned unions for a meeting on Friday.
Luigi Angeletti, head of the UIL union that ditched talks with the French carrier on Monday, said he did not think the airline had walked away for good and urged decisions on Alitalia to be taken after the April vote.
With the European Union banning further state aid to the carrier, Italy's economy minister has said a EUR300 million bridge loan to keep it alive over the next few months could be given only if it sealed the deal with Air France-KLM.
One union official said summer bookings by tour operators on Alitalia had dropped 50 percent from last year. Alitalia's international bookings have also fallen 40 percent over the past month, Ansa news agency said, citing market sources.
Media magnate and opposition leader Silvio Berlusconi, tipped to become Italy's next prime minister, renewed his appeal to Italian businessmen to come forward and save Alitalia.
Air France-KLM, the world's biggest airline by revenues, was attracted by the Italian airline's lucrative shuttle route from Rome to the country's financial capital, Milan.
Some newspapers looked to a possible return to the bidding of domestic airline Air One, which was snubbed by the government in favor of Air France-KLM, or even German airline Lufthansa, which pulled out of last year's aborted auction.
But Lufthansa denied any plans to bid for Alitalia, though it said Italy remained an attractive market for it.
"With the global credit crisis, it is uncertain whether any investor can finance Alitalia's takeover and restructuring through debt." said Diogenis Papiomytis, an aviation consultant. "The future for Alitalia is uncertain and it could be argued that the only option now is bankruptcy."
