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Alitalia cancels flights

Monday 13 Oct 2008 8:44am

Italian airline Alitalia has added to growing fears that the company may soon go into liquidation after cancelling somewhere in the region of 20 to 30 flights from Rome's Fiumicino airport. However the airline, which filed for bankruptcy protection last month, has denied that flight cancellations have come as a result of having run out of aviation fuel. Instead the company told the AFP news agency that the action was caused by 'technical reasons'. As a result of the bankruptcy protection Alitalia shares were suspended in June, and the airline is currently being run by a special administrator. The CAI consortium of buyers withdrew a rescue offer for the airline last Thursday as a result of opposition from trade unions. The CAI takeover was backed by three of Alitalia's nine unions, while the remaining six opposed the plans, which involved cutting 3,000 jobs. The CAI bid to rescue Alitalia stood at 1bn euro ($1. 4bn; £790m) and involved the airline merging with second-largest airline Air One. Its 1. 2bn euro debt would then be absorbed by a second firm, which would subsequently be liquidated. Plans for the Alitalia to be taken over by Air France-KLM fell through when unions refused to accept the takeover's terms back in April. The Italian government has insisted that the CAI deal is the only way for Alitalia to avoid going into liquidation, with Maurizio Sacconi, the Italian Labour Minister, commenting that: 'We need to return to the negotiating table because there is no-one else in the race. ' Italy's Prime Minister Silvio Berlusconi has also pledged to do all he can to save airline, as the Italian government holds a 49. 9% stake in the company. However the government is realistically very limited in the supporting action it can take because it is illegal for a state to give aid to an airline under European Union law. It was also reported last Friday that Italy's civil aviation authority may move to ground all of Alitalia's planes within 10 days from Monday of this week unless the airline can agree an alternative rescue plan.

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