Air France-KLM: Alitalia offer is off

Business Materials 22 April 2008 02:55 (UTC +04:00)

( AP ) - Air France-KLM said Monday its offer to buy struggling Italian airline Alitalia for 139 million euros ($220 million) is "no longer valid," and left no impression that it planned to return with another.

The French-Dutch carrier said its Italian counterpart has failed to clarify the "legal situation" after talks on a possible takeover were broken off earlier this month.

In a brief statement, Air France-KLM said that it told Alitalia of the decision and that the Italian airline did not meet the necessary conditions. Air France-KLM spokeswoman Veronique Brachet said she would not comment beyond the statement.

Fabio Berti, head of the Alitalia pilots union Anpac, played down the significance of the statement, insisting that it was just a "snapshot" of the state of the deal and that "absolutely nothing changes."

"There is no withdrawal of the offer," he was quoted as saying by Italian news agency Apcom, "and Air France-KLM didn't say it was no longer interested in Alitalia, but only that for now, there aren't the conditions to launch" a bid.

There was no immediate comment from Rome-based Alitalia.

Air France-KLM's offer, announced March 14, values Alitalia at 139 million euros ($220 million) and calls for the layoffs of 2,120 Alitalia employees, among other measures.

Air France-KLM was the only offer on the table, but negotiations broke down three weeks ago after the French-Dutch company wouldn't bow to Italian union demands.

Italy's economy minister had warned that if the Air France-KLM deal did not go through, Alitalia could face bankruptcy.

Italian news reports said the Italian government would hold a special Cabinet meeting in the next 48 hours on Alitalia, which is 49 percent state-owned. The Italian flagship carrier is losing some 1 million euros ($1.6 million) a day, and the government had been trying for months to find a buyer.

Italian Premier-elect Silvio Berlusconi had vowed this month on the campaign trail to veto any deal with Air France-KLM, and had insisted for weeks that a group of Italian businessmen were ready to step forward with their own offer. No such group ever came forward.

Center-left deputy Premier Francesco Rutelli said Air France-KLM's retreat was a "disastrous consequence" that he blamed on lobbying by the conservative Berlusconi and his northern-based electoral allies against the deal.

Some unions fear that Air France-KLM would scale down operations at Milan's Malpensa airport if it acquired Alitalia.