Alitalia Buyers Confident Of December Relaunch

November 3, 2008

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Investors bidding for Italian airline Alitalia are confident they can relaunch it by December 1 even though its pilots and flight attendants still reject the deal.

The group, Compagnia Aerea Italiana (CAI), submitted a binding offer on Friday after a week of hard bargaining with the airline's myriad unions.

Although it did not win over the pilots and flight attendants, it did secure the support of four unions which carry most of the clout.

CAI chief executive Rocco Sabelli said he hoped those who were still holding out would eventually change their minds.

"I am convinced that in the end we will embark on this adventure of relaunching Alitalia with them," he told the La Repubblica newspaper on Sunday. "By the first of December we can take off."

CAI's offer ended months of national angst over the future of Alitalia, which risked being grounded in coming weeks for lack of funds.

Its pilots and flight attendants had accepted the idea of the takeover, but they rejected the final offer because of the terms and conditions of new contracts.

One of their union leaders scoffed at the idea that the new Alitalia could fly without them. "They will put planes in flight with the baggage handlers? I wish them luck," Massimo Notaro of Unione Piloti told the Corriere della Sera newspaper on Saturday.

Regardless of the position of the five recalcitrant unions, CAI Chairman Roberto Colaninno said his group would call each of their members to offer them a job at the new airline.

"We will hire flight personnel using a roll call," he said in an interview published in Sunday's Il Sole 24 Ore newspaper. "We will not surrender ourselves to... blackmail."

Neither Sabelli nor Colaninno would divulge their offer price for the best assets of Alitalia, but they plan to raise EUR1.1 billion euros to pay for the purchase and relaunch. Il Sole 24 Ore said CAI was offering around EUR350 million.

Before it can go ahead with its plans, CAI first needs to get approval from Alitalia's bankruptcy commissioner and a decision is expected in the next two weeks.

CAI also wants to wait for the European Commission to decide whether a EUR300 million loan given to Alitalia by the Italian government broke EU rules banning state aid. In the case that it is seen as illegal, CAI does not want to assume the liability.

Italian newspapers said on Sunday that EU Transport Commissioner Antonio Tajani had proposed relegating the loan to the part of the airline that CAI did not want.

CAI is also on the verge of a deal with Air One, a smaller Italian carrier with which it will merge the new airline. The final touch will be finding a foreign partner, the most favoured candidates being Air France-KLM and Lufthansa. CAI is expected to announce its choice by mid-November.