Alitalia Rescue Talks Head Into Tuesday

The airline, which is operating under a bankruptcy commissioner, has not been in profit since 1999.

Talks to get all Alitalia's unions on board for a job-cutting rescue by Italian investors are set to spill into Tuesday as pilots and crew have not signed up to an initial deal agreed by other unions to stave off bankruptcy.

Despite fears it might cancel flights due to difficulties in buying fuel, state-owned Alitalia flew as normal on Monday as the crisis talks continued and all sides said it remained on a knife edge.

"We have arrived at a point where things either come to fruition or they break," said Raffaele Bonanni, head of CISL, one of the four unions which signed up to the framework deal.

"If they break we'll be squandering one of the richest markets in the world of aviation and, above all, we will lose 20,000 jobs," Bonanni said.

Another union that backed the framework accord, FILT-CGIL, said the conditions were not in place for a full-blown agreement. Five other labour groups, representing pilots and cabin crew, oppose the rescue plan altogether, fearing huge job and salary cuts.

The government called talks with those groups for Monday evening and Tuesday, hoping to break the deadlock.

Prime Minister Silvio Berlusconi stressed the alternative to the rescue proposal was bankruptcy.

Speaking on a television show on Monday night, he said Lufthansa would be the best international partner for a revived Alitalia. He had opposed the carrier's planned sale to Air France-KLM earlier this year.

On Monday afternoon, hundreds of angry employees gathered near Berlusconi's office chanting slogans such as "Buffoons, we are coming". The son of a pilot carried a banner saying "A little money for my dad, a little bread for us". The civil aviation authority said at the weekend Alitalia's operating licence was at risk after the airline confirmed it was having trouble buying jet fuel from wary suppliers. But Rome and Milan airports said traffic was normal.

ENI Chief Executive Paolo Scaroni said the Italian oil company would not give Alitalia fuel without cash up front.

"Not even if Berlusconi or the Pope asks me to," Scaroni told La Repubblica newspaper: "(Eni) cannot supply fuel to airlines if they cannot pay cash. There is no moral suasion -- international agreements are clear."

IN RED SINCE '99

An Alitalia collapse would be a huge political blow for Berlusconi, a billionaire media mogul who promised voters he would use his business contacts to find an Italian buyer.

His rescue plan would see a group of investors buying the profitable parts of Alitalia to then relaunch it as a slimmed down regional carrier.

Last year the previous, centre-left, government agreed to sell the state's 49.9 percent stake to Air France-KLM, but the Franco-Dutch carrier walked away due to opposition by unions to a deal Berlusconi said he would block if he returned to power.

Now operating under a bankruptcy commissioner, Alitalia risks becoming the first major European flag carrier to go bust since Swissair collapsed in 2001. Belgium's Sabena also filed for bankruptcy in 2001.

Alitalia loses more than 2 million euros a day -- a state of affairs blamed on years of political interference, labour disputes, mismanagement and, most recently, the soaring fuel costs that have weighed on airlines around the world.

Britain's third-largest package holiday operator, XL Leisure Group, grounded all flights on Friday after going into administration. Discount transatlantic carrier Zoom Airlines began bankruptcy proceedings last month.