Union threatens Alitalia takeover

Tycoon Silvio Berlusconi is staking his campaign on keeping Alitalia Italian

A major union representing Alitalia workers has walked out of talks with Air France-KLM putting the Franco-Dutch firm's takeover at risk.

The meeting was briefly suspended after the UIL union demanded the deal be put on ice until after the April elections.

Air France-KLM has said it will pull its offer without union support. Unions are opposing its job cut plans.

Alitalia said a deadline on talks with unions has now been extended from Monday to Wednesday.

Italian media reports said Air France-KLM's talks with unions subsequently restarted without UIL.

Alitalia boss Maurizio Prato has urged the unions to accept Air France-KLM's offer of 0.10 euros a share or risk the loss-making flag carrier going bankrupt.

Union battle

A more generous version of the takeover plan was unveiled by Air France KLM at the end of last week, which offered better severance terms to the staff that would be laid off.

But these terms were rejected by all nine of Alitalia unions representing about 11,000 workers because of the Franco-Dutch firm's intention to cut 2,100 jobs and close Alitalia's cargo unit by 2010.

Earlier, Air France-KLM said the success of its offer for its rival was in the hands of Alitalia.

"I am not able to predict the result of the negotiations we have engaged in," Air France-KLM's chief operating officer Pierre-Henri Gourgeon said.

"But we have made a precise offer. The future [of the offer] now depends on our Italian partners," he added.

Attractive asset

Air France-KLM is keen to secure backing for the deal to buy the Italian government's 49.9% stake in the national flag carrier before April elections, which could herald a new government that may scupper the takeover.

Silvio Berlusconi, the leader of the centre-right opposition, has staked his campaign on saving Alitalia from foreign investors trying to "colonialise" the airline.

His aggressive comments against the takeover have caused Alitalia's shares to fluctuate wildly, leading to their suspension several times in the past two weeks including on Monday morning.

So far though, the white knight Mr Berlusconi has been touting has not materialised.

Despite its history of striking staff and losses, Alitalia is appealing to Air France-KLM because of its dominance of the lucrative Milan-Rome route, and the company has ambitious plans to revive its fortunes within two years.

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