D-day arrives for ailing airline

Alitalia's board will meet today to pick a preferred bidder for the troubled Italian airline, Alitalia, as key business and labor leaders threw their weight behind domestic airline Air One over much larger rival Air France-KLM.

Alitalia, which has been trying to find a buyer for nearly a year, will announce its choice for exclusive talks following today's meeting, it said in a statement.

Analysts said political and industrial considerations will play a stronger role than price in the final decision over the winner for the flag carrier - a source of national pride, even though it loses about a million euros a day.

Alitalia has a market capitalization of about 1.1 billion euros and debt of 1.2 billion euros.

Its biggest attraction is its dominance of the lucrative business route from the financial capital Milan to Rome, but potential deterrents include its vulnerability to strikes and its financial woes.

Alitalia Chairman Maurizio Prato has said the Air France-KLM offer is in line with his own ideas for the carrier's restructuring, and newspaper La Stampa on Saturday cited government sources as saying the state was inclined toward the foreigner.

But Italy's three biggest trade unions said on Tuesday they backed the bid by privately held Air One, a smaller Italian carrier that has said it would invest 4 billion euros in Alitalia if selected.

"If Alitalia were to go to a foreign company, we would in effect be the only big European country not to have a flag carrier," the heads of the Cgil, Cisl and Uil unions said in a statement.

A union official said the Air One plan called for 2,750 job cuts at Alitalia - nearly matching the entire staff of Air One, whose annual revenues are surpassed by Alitalia's losses. Another official said the cuts would be even higher, at 3,850.

Alitalia's staff currently totals about 19,000.

The head of Italy's main business lobby Confindustria said Air One's offer had all the elements needed to create a good deal and that the combined group could always strike foreign alliances later.

"I believe that they (Air One) have the business conditions and strong financial support for a good operation for the country and for Alitalia," Confindustria's Luca Cordero di Montezemolo told reporters at a conference.

Analysts have said Air One benefits from its all-Italian appeal - it has the backing of one of Italy's biggest banks, Intesa Sanpaolo - but Air France offers the struggling carrier stronger prospects of a recovery long-term.

Agencies

(China Daily 12/13/2007 page16)