Alitalia will go bankrupt unless a rescue plan is put in place within three months, Prime Minister Romano Prodi said today, describing the finances of Italy's flag-carrier airline as 'completely out of control'.
'Alitalia is undergoing the most difficult period of its history,' Prodi said at a meeting with transportation unions. 'The situation is completely out of control, and I see no parachute. We have until the end of January to find a solution and avoid bankruptcy,' he added.
The company has forecast a heavy second-half loss this year after registering a loss of €221m in the first half and faces the fate of other medium-sized national airlines that have gone under, such as Belgium's Sabena, Swissair and Air Lib of France.
Unable to stanch its losses - €167m in 2005 - Alitalia did not even try to balance its books this year, with red ink expected to approach €300m, according to an internal document quoted by the Italian press.
Alitalia, which is 49% controlled by the Italian government, has failed to turn itself around barely more than a year after raising $1 billion, covered by a group of banks and the state, to launch an ambitious restructuring plan.
Relations with the unions also began to nosedive with the plan, which called for 3,700 job cuts from the company's 20,000-strong workforce.
Alitalia has frequently sought closer ties with Air France-KLM, but the Franco-Dutch company, which holds a 2% stake in the Italian carrier, has declined pending improvements in its financial outlook.
Italy's transport ministry has suggested a fresh appeal to private investors, as the state is no longer able or willing to intervene financially.
