Italian airline Alitalia has warned that it could start cancelling flights from Monday over problems buying fuel.
The airline also warned it could lose its operating licence if it fails to seal a deal with unions to avoid total collapse.
‘There are difficulties relating to the supply of fuel which could put some flights at risk,’ Alitalia's bankruptcy commissioner, Augusto Fantozzi, said in a statement today.
The airline’s collapse would be a political disaster for Prime Minister Silvio Berlusconi who promised voters he would use his business contacts to find an Italian buyer for the near-bankrupt airline.
And while Alitalia's woes are related to years of political interference, it also has suffered from soaring fuel costs and economic downturn that are pressuring the sector worldwide.
Hundreds of airline staff, who had been holding a noisy ad hoc demonstration at Rome's Fiumicino airport, fell silent as the news that planes would start to be grounded was read out by a union official.
Italy's civil aviation authority Enac said Alitalia's licence to operate was in jeopardy.
‘If there is no solution very soon that guarantees the continuity of the carrier's operations, the basis on which Enac issued Alitalia with a six-month provisional licence will no longer be met,’ Enac said in a statement.
Unions rejected a rescue plan by the consortium CAI which foresees thousands of job losses - the third attempt to save the heavily loss-making airline from collapse.
With strict European Union rules banning state aid to airlines, the government, which still holds a 49.9% stake in the carrier, has limited options.
While CAI has not withdrawn its takeover offer, it said it would not make additional concessions to employees.
Alitalia has been constantly dogged by labour disputes and financial woes and has not posted a profit since 1999 and had nearly €1.2 billion in debt as of July.
