Lufthansa Meets Unions At Struggling Alitalia

Lufthansa and Air France-KLM hope to boost their role in the attractive Italian market through a minority shareholding with Alitalia.

German airline Lufthansa met Alitalia's unions on Friday to discuss a possible stake in the bankrupt airline as Italy pushed to wrap up labour talks to seal an investor bailout.

Lufthansa and Air France-KLM hope to boost their role in the attractive Italian market through a minority shareholding with Alitalia, should its proposed relaunch by the CAI consortium of Italian investors succeed.

The investor deal collapsed last week but lurched back to life on Thursday after winning the support of four major unions, including Italy's biggest. The Anpav flight assistants' union on Friday also agreed to get on board, and talks continued to try and win over the remaining pilot and flight staff unions.

"They will be trying to find ways to give the unions some ability to save face while not impacting the economics (of the offer)," said a source closely monitoring the talks.

Italy's labour minister had hoped to clinch support from the remaining unions by an 1100 GMT Friday deadline, but it passed without having any impact on the talks, which continued. He said CAI, which has now said its offer will expire on Oct. 15, planned to press ahead with its bid even without their backing.

ROMAN MEETING

The four major unions backing the bailout met Lufthansa Chief Executive Wolfgang Mayrhuber on Friday and they said he conveyed the German carrier's interest in Alitalia.

Lufthansa declined to comment specifically on its interest in Alitalia but said Mayrhuber was in Rome at the Italian government's request, to discuss the stricken Italian carrier.

Lufthansa, which has become an active player in European airline consolidation, has long had its eye on the Italian market but the latest meeting is its clearest demonstration yet of interest in striking an alliance with Alitalia.

"It's evident that (the Germans) are interested, just as our interest in them has been obvious," said Raffaele Bonnani, the head of Alitalia's second-biggest union, Cisl.

Sources with knowledge of the matter said Lufthansa is mulling whether to bid for a 20 percent stake in Alitalia to become its foreign partner. A separate union source said the German airline was interested in an even bigger stake.

Rival Air France-KLM, whose deal to buy Alitalia collapsed this year over union opposition, is also eyeing a stake of as much as 25 percent in the CAI consortium taking over Alitalia, sources familiar with the matter have said.

But it could face an uphill climb, with major Alitalia unions openly supporting Lufthansa and signs that Prime Minister Silvio Berlusconi would also favour a tie-up with the German carrier after opposing Air France-KLM's deal in the past.

"It's not a question of liking one particular nationality, it's about the national interest," Bonanni said. "(Lufthansa) has a multi-hub system that works well with our need to favour two Italian hubs, Milan and Rome."

Berlusconi has repeatedly stressed an eventual foreign partner for Alitalia will only be allowed a minority stake.

Air France-KLM already holds a symbolic 2 percent stake in Alitalia and the two have been long-time commercial partners in the SkyTeam Alliance, while Lufthansa has a sales and technical alliance with Alitalia's biggest domestic rival Air One.

Alitalia has been on the brink of collapse for years thanks to a mixture of political interference, labour unrest, inefficient strategies and high fuel prices.

Sealing the carrier's latest rescue would be a political triumph for Berlusconi, who made an election vow to save the airline and keep it Italian. His top aide and key ministers have been presiding over labour talks that continue.