Talks break down between Air France-KLM, Alitalia unions

19th March 2008, Comments 0 comments

Talks broke down on Tuesday between unions representing Alitalia employees and Air France-KLM.

   ROME, March 19, 2008  - Talks broke down on Tuesday between unions
representing Alitalia employees and Air France-KLM, which wants to buy the
near-bankrupt Italian airline, the ANSA news agency reported.
   The unions rejected plans by the European aviation giant to slash 1,600
jobs from Alitalia's 11,000-strong work force, ANSA said, adding that they
sought a new meeting with Air France-KLM boss Jean-Cyril Spinetta, but no date
was set.
   "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 told union leaders, according to a
   "With your contribution, Alitalia will be able to restore its
profitability," Spinetta said, as criticism swirled over the conditions set by
Air France-KLM for the takeover.
   The French-Dutch company requires the unions' green light by March 31 for
the deal to go through.
   Spinetta reportedly warned earlier 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.
   Italy's outgoing centre-left government, 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 on Tuesday 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.
   Also Tuesday, Italian Transport Minister Alessandro Bianchi voiced strong
opposition to the takeover 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 ANSA.
   "For the main goal to remain that of preventing Alitalia's bankruptcy ...
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.
   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.
   Earlier Tuesday, the secretary general of the CISL union, Rafaelle Bonanni,
slammed the takeover bid, warning that it would lead to 7,000 lost jobs.
   The Italian government "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 told Tuesday's La Repubblica daily that the city
wanted direct compensation in exchange for dropping a 1.25 billion euro (1.97
billion dollar) lawsuit over the matter.


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