With elections looming, Alitalia takeover is cause celebre in Italy

Business Materials 24 March 2008 03:39 (UTC +04:00)

An "arrogant" takeover bid by Air France-KLM for the near-bankrupt Italian flagbearer Alitalia has become a cause celebre in Italy's election campaign with the vote just three weeks away. ( AFP )

Conservative opposition leader Silvio Berlusconi - tipped to win the premiership for a third time in next month's polls - jumped into the fray after talks collapsed between the European giant and Alitalia unions last week.

Berlusconi, a self-made billionaire, branded the Air France-KLM offer as "arrogant" and said that if elected he would reject the sale out of hand.

Air France-KLM has said that it would not go ahead with the deal without the approval of the unions as well as the government that will emerge from the mid-April elections.

Berlusconi revived the idea of a "Made in Italy" rescue plan for Alitalia, suggesting that his sons could take part in a consortium to keep the national symbol in Italian hands, and asking outgoing prime minister Romano Prodi to approve a bridging loan while details are worked out.

Berlusconi claimed that Intesa Sanpaolo was willing to back a bid by an Italian consortium to rescue Alitalia, but the Italian banking giant's CEO Corrado Passera quickly remarked that nothing was "on the table."

Undeterred, Berlusconi said Friday: "I've appealed to the pride of Italian entrepreneurs who think as I do that we shouldn't be colonised."

He said that in three or four weeks a group of Italian investors would make a "definitive proposal which, I hope, will resolve the situation."

Berlusconi's rival Walter Veltroni, head of the new centre-left Democratic Party, said Alitalia should be kept out of "the electoral meat grinder," adding: "I don't want to see a consortium that vanishes after the elections."

The Italian financial daily Il Sole 24 Ore also took a dim view of Berlusconi's move, calling it a "very dangerous" blend of politics and business in an editorial on Saturday.

Infrastructure Minister Antonio Di Pietro even accused Berlusconi of trying to manipulate the volatile Alitalia share price with his statements, Il Sole reported.

Unions - which have been asked to approve the Air France takeover terms by March 31 and walked out of initial talks last week - are set to meet on Tuesday.

Alitalia, which has lurched from crisis to crisis for years, is now close to bankruptcy, losing around one million euros (1.6 million dollars) a day.

A senior Air France-KLM executive on Friday insisted that Alitalia had to take a decision now and not after the elections.

Prodi's centre-left government approved the purchase of the state's holding of 49.9 percent in Alitalia by Air France-KLM last Monday in a share swap valuing the Italian airline at 140 million euros.

Air France-KLM chairman Jean-Cyril Spinetta warned on Wednesday that there was little room for manoeuvre in the negotiations, and insisted that the takeover plan would involve only 2,100 job cuts from the 11,000-strong work force.

Trade union leaders say the takeover would lead to 7,000 job losses.

Milan Polytechnic transport economist Marco Ponti told AFP: "This last-minute Italian solution seems too late, but nothing is impossible.

"The problem is that Alitalia is worth nothing commercially," he added. "It loses money every time a plane takes off."