Tuesday March 18, 08:48 PM
Sparks fly as Air France negotiates with unions in Alitalia bid
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ROME (AFP) - A bid to take over Italy's near-bankrupt Alitalia (Milan: AZA.MI - news) airline came under strain Tuesday as union leaders and the transport minister unleashed harsh criticism at would-be buyer Air France (Paris: FR0000031122 - news) -KLM.
Air France-KLM chairman Jean-Cyril Spinetta, locked in make-or-break talks with Alitalia unions, was reported to have warned that his company could walk away from the deal, accepted Monday by the Italian government.
"We are certainly not obliged to acquire Alitalia," Spinetta said, according to a labour leader who was present at the talks.
Spinetta added that the French-Dutch company required a green light from the unions by March 31 for the deal to go through, the labour leader told AFP.
In a statement, Air France-KLM said Spinetta told labour unions in Rome that the troubled Italian carrier could return to profit as part of a larger corporate entity.
"The Air France-KLM group is not here to buy Alitalia but to see if it is possible, with the personnel of Alitalia, to take part in the creation of a major group with a global reach," Spinetta said.
Alitalia's share price continued in free fall on Tuesday, closing nearly 30 percentage points lower at 28 euro cents, compared with Air France-KLM's share swap offer valuing the stock at 10 euro cents per unit.
Meanwhile Italian Transport Minister Alessandro Bianchi voiced strong opposition to the bid.
"More than an offer," the Air France-KLM proposal is like "a diktat full of vexing clauses, to the point of being beyond unacceptable and casting doubt on the real intentions," Bianchi said in a report carried by the ANSA news agency.
"In order for the main goal to remain that of preventing Alitalia's bankruptcy and to renew the role and image of the national symbol, I think we should work either to ask for significant changes in the offer from Air France-KLM, or to obtain new and more constructive offers from other operators," said the communist Bianchi.
The outgoing Italian government of centre-left leader Romano Prodi, which owns 49.9 percent of the financially strapped Italian company, on Monday approved the acquisition through a share swap of one Air France-KLM share for every 160 Alitalia shares.
The result would value the Italian airline at 140 million euros (218 million dollars).
The talks at Alitalia headquarters began shortly after a group of protesters trying to enter the building clashed with police, leaving one demonstrator slightly injured, police told AFP.
Some 350 demonstrators including employees of AZ Servizi, the maintenance unit that would be shut down under the takeover deal, had gathered outside the venue hours earlier.
A second demonstration was staged at Rome's Fiumicino airport over the Air France-KLM offer, which would cut 1,600 jobs.
Ahead of the talks, union leaders, who have the power to torpedo the takeover, reiterated their objections, in particular to plans to scrap Alitalia freight operations and break up the maintenance unit.
The secretary general of the CISL union, Rafaelle Bonanni, slammed the behaviour of the Prodi government as "absolutely detestable," warning that it would lead to 7,000 lost jobs.
"They did everything in secret, alone, and at the last minute they want to unload the decision onto our shoulders," he said on Italian television.
Alitalia's main union CGIL demanded "negotiating leeway" on the takeover while threatening to use its veto.
"We have the ability to take a clear responsibility, a 'yes' or a 'no,' with all the consequences that that entails," warned CGIL secretary general Guglielmo Epifani.
Even the pilots' union ANPAC, which has agreed to the takeover in principle, called the French-Dutch offer "unacceptable."
The pilots are especially worried about the plan to scrap the freight service from 2010.
The government's backing for the deal, which had been expected, followed the airline's acceptance of the Air France-KLM offer at the weekend.
The city of Milan, for its part, is unhappy about huge cutbacks planned for Alitalia at Malpensa airport.
Mayor Letizia Moratti said in an interview published on Tuesday that the city wanted direct compensation in exchange for dropping a lawsuit over the matter.
SEA, the company that manages Milan's three airports and is controlled by the city, was planning to seek 1.25 billion euros (1.97 billion dollars) in view of the cutbacks to be implemented next month.
Alitalia plans to cancel several unprofitable routes in and out of Malpensa beginning in late March.
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