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Roundup: Alitalia heads for receivership as Italy gov't nixes nationalization

Xinhua, April 27, 2017 Adjust font size:

Lufthansa said Thursday it had no intention of buying Italian air carrier Alitalia, making Alitalia likely to be placed under receivership after over 60 percent of employees voted against the management's latest turnaround plan and government warned it would not step in to nationalize the airline.

"We have a clear intention of not acquiring Alitalia," said Lufthansa's financial director, Ulrik Svensson.

According to Ansa news agency, Lufthansa had been one of the options floated after Prime Minister Paolo Gentiloni rejected the idea of nationalizing the chronically loss-making carrier.

The government said it would seek a 300 to 400-million-euro (327 to 436 million U.S. dollars) bridging loan, with the EU's permission, to keep the airline flying while it looks for possible new investors.

The industrial plan approved on April 14 by management and unions following government mediation called for 980 redundancies, an 8-percent wage cut, and shortened holidays from 120 to 108 days off per year. These would have accounted for one third of cuts in operating costs.

"It is the best possible agreement we could bring home under the circumstances. Workers are being asked to make sacrifices, but in exchange for recapitalization and investments for the company," CISL union secretary-general Annamaria Furlan told local Radio24.

"Alitalia cannot shut down," she warned.

A total of 10,173 workers took part in the referendum vote on the industrial plan. But in spite of warnings from union leaders and government that this was a last-ditch plan and that the airline would have no future without it, 6,818 of employees voted against it, the transportation local of Italy's largest trade union confederation, CGIL, said on Monday.

"We were disappointed at the result of the referendum. We are seeking solutions, but there can be no nationalization," Gentiloni said Wednesday. "The government is committed on the side of the workers, citizens and consumers."

"We worked hard to reduce management demands," Industry Minister Carlo Calenda told RAI public broadcaster on Wednesday. "But we can't ask taxpayers to bear the brunt (of saving Alitalia)."

The government said it would extend the airline a six-month bridge loan of 300 to 400 million euros, and that it would name a special commissioner to navigate the company through the next phase.

If unions had approved the agreement, shareholders and investors would have unlocked recapitalization of 2 billion euros, including more than 900 million in new financing, Alitalia said in a statement.

"The current crisis will see the airline post losses of some 600 million euros on turnover of under 3 billion euros in 2016," CGIL-Filt union chief Nino Cortorillo said on the union's website. The airline, which has been in crisis since the early 1990s, has been unable to recover due to a series of "mistaken industrial plans and alliances," he wrote.

Alitalia has lost 20 percent of its traffic over the past two decades, with its short-haul business undercut by budget airlines and high-speed rail. Management has responded by reducing its fleet and its workforce and contracting out many operations, but this did nothing to staunch the financial hemorrhage, said Cortorillo.

The current crisis could spell chaos for thousands of passengers who may have trouble recouping their tickets should the airline fold. Alitalia flies to 94 destinations, including 26 Italian and 68 international destinations, with 4,200 weekly flights and 144 routes, according to its corporate website.

Calenda said that at this point the objective of the government "is to reduce costs for Italian citizens and travelers to a minimum."

Founded in 1947, Alitalia currently has an operating fleet of 122 aircraft and employs just over 12,000 people worldwide, including flight and ground crews and administrative staff.

The Italian airline was rescued in 2015 by United Arab Emirates carrier Etihad, which bought a 49-percent stake in the troubled company. Italian shareholders, led by UniCredit and Intesa Sanpaolo banks, control the remaining 51 percent. Endit