Italy in Last Bid to Sell Alitalia, Closure Looms

Alitalia has been on the brink of collapse for years as political interference and labour unrest caused it to pile up debt.

Alitalia's special administrator will make a last-ditch attempt to sell Italy's loss-making national airline on Monday by public tender before calling in the liquidators after a failed rescue bid.

Alitalia faces liquidation in a matter of days after a plan to rescue the carrier by Italian investors collapsed last week when unions refused to accept its conditions. Flights continued as normal on the weekend but could be grounded in a week's time.

With Prime Minister Silvio Berlusconi, who made an election promise to rescue the airline, acknowledging no foreign airline was about to step in and that Alitalia could be doomed to bankruptcy, the auction appears a mere formality.

"We will proceed with a public request (for offers)," the special administrator, Augusto Fantozzi, told Il Messagero daily in comments published on Sunday. "It will formalise what I have been doing -- without any results so far despite all my efforts -- regarding the main assets."

Suffering from the high fuel prices and an economic downturn that have hit the airline sector globally, Alitalia has been on the brink of collapse for years as political interference and labour unrest bled it of cash and caused it to pile up debt.

NO OFFERS

Berlusconi opposed the previous centre-left government's bid to sell the state's 49.9 percent stake, including an offer from Air France-KLM, saying it must stay in Italian hands.

The media mogul returned to power in May promising to rescue it and used his influence to rally 16 business groups in the CAI consortium. But CAI withdrew its offer last week after pilots and cabin crew refused to accept job cuts and new contracts.

The government rules out further state aid or, as some leftists propose, the renationalisation of Alitalia. Italy is already in trouble with the European Commission over a 300 million euro ($435.2 million) loan to keep the airline flying.

"There is no possibility of another rescue bid so it could be that our Alitalia is heading towards bankruptcy procedures," Berlusconi said on Saturday.

Fantozzi meets civil aviation authorities on Monday to see if Alitalia can retain its operating licence, and he must then decide on announcing the public tender for Alitalia's assets.

The authority says that if there is no feasible rescue plan, Alitalia's planes will be grounded within a week to 10 days.

Fantozzi reiterated he that he had received no offers for the airline operation, only some interest in heavy maintenance, cargo, handling and catering units and the call centre.

He had again contacted Air France, Lufthansa and British Airways about buying Alitalia or its assets, but said: "Nobody has stepped forward."

Transport Minister Altero Matteoli made it clear that unless unions changed their minds about CAI's conditions, "in a few days we will ground Alitalia's planes as the law requires".