Air France-KLM Ends Talks for Alitalia
Wednesday April 2, 6:17 pm ET
By Frances D'Emilio, Associated Press Writer
Air France-KLM Breaks Off Talks to Acquire Alitalia
ROME (AP) -- Air France-KLM broke off negotiations Wednesday to buy Alitalia, saying conditions being pushed by unions would not allow it to quickly return the airline to profitability.
The collapse of the talks dealt a setback to the government's effort to sell the flagship carrier before the ailing company runs out of cash.
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Alitalia's chairman, Maurizio Prato, resigned, and the company said that the approval it gave last month to Air France-KLM's offer no longer held. It scheduled a board meeting for Thursday to consider what to do after Air France-KLM said it could not continue the talks.
"No restructuring plan in the airline business has ever succeeded without the backing of the workers," Air France-KLM said in a statement. "After long negotiations, the unions today came up with a new proposal that is completely different."
Alitalia is losing nearly $1.6 million a day, and the airline said in February that its cash reserves had dropped to about $282 million, down nearly 40 percent from a month earlier. The airline said last week that its liquidity had improved, thanks to a tax refund of about $109 million and about $125 million from the sale of Air France-KLM shares.
The Italian government has been trying for more than a year to sell its 49.9 percent stake in Alitalia. Air France had made a binding offer valuing the airline at about $216 million, far less than expected. Unions are worried about 2,100 planned layoffs among the 11,000-strong work force.
Air France-KLM had said the deal was contingent on approval by the next government. Elections are less than two weeks away, and front-runner Silvio Berlusconi has strongly criticized the Air France-KLM bid.
Jean-Cyril Spinetta, chairman of Air France-KLM, said the breakoff "didn't depend on us. It was a plan in which I deeply believed and in which I continue to believe because it would have allowed Alitalia to rapidly find the path" to a comeback.
Pilots union Anpac leader Fabio Berti told Sky TG24 TV that Spinetta walked out of talks after he "brusquely replied that he didn't have the mandate" to negotiate on the proposal made by the unions on Wednesday.
Guido Barcucci, a spokesman for the union FILT-CGIL, said the unions had proposed that Fintecna, which is under the Treasury Ministry's wing and possesses 49 percent of ground services unit AZ Servizi, enter the deal as a partner and be part of the capitalization plan.
If Spinetta "examines our proposal calmly, he'll find that it's not unreasonable," Andrea Cavola, a union leader, told Sky television.
Spinetta had reportedly sweetened the terms after talks were suspended for 24 hours earlier in the week after the walkout of UIL, the largest Alitalia union. That proposal apparently aimed to reduce the number of pilots and flight attendants that would be laid off, introduce two new Boeing 777s into the fleet as soon as next year and reconsider a plan to close the cargo unit in 2010, Italian media reported.
Finance Minister Tommaso Padoa-Schioppa told lawmakers Wednesday that selling Alitalia to another bidder was no longer possible. The government is ready to grant the cash-strapped carrier a bridge loan only if it can reach a deal with Air France-KLM, Padoa-Schioppa said.
Associated Press Writer Elaine Ganley in Paris contributed to this report. |
