Italian Gov't Talks With Alitalia Management, Unions Yield Little Progress

ROME_Talks on Wednesday night at the Italian premier's office involving Alitalia's chief executive and union leaders appeared to make no progress in defusing tensions after wildcat strikes forced the cancellation of hundreds of flights and raised questions about the airline's future.

Union leader Savino Pezzotta told reporters at the end of the meeting that unions would present Alitalia with a new statement on Thursday and that the government had pledged to study it with the airline. He did not give details.

Sky TG24 private TV reported that Premier Silvio Berlusconi's top Cabinet aide at the meeting indicated that the premier's office was not the best place to work out the dispute. The Italian news agency ANSA indicated that any future talks might be held at the Labor Ministry.

Workers at the airline ended a week of strikes on Jan. 26 after the government, which owns a 49.9 percent stake in Alitalia SpA, announced the talks, bringing together all sides.

Among those at the meeting were Cabinet Undersecretary Gianni Letta, the transport and labor ministers, leaders of Italy's main labor confederations and the airline's chief executive Giancarlo Cimoli.

Workers have been protesting Alitalia's restructuring efforts, which include cutting jobs and spinning off the airline's flight unit from its less profitable ground services business.

On Tuesday the Industry Ministry announced it was suspending the proposed sale of low-cost airline Volare to Alitalia. The ministry cited a ruling by a Rome court that had previously blocked Alitalia's attempt.

Also Tuesday, Alitalia said it had used a €1 billion (US$1.2 billion) rights issue to cut its net debt by about half at the end of December to €879 million (US$1.06 billion), down from €1.77 billion (US$2.14 billion) at the end of November.

The rights issue reduced the government's stake to just under 50 percent from 62 percent.

Hit by competition from domestic and foreign low-cost airlines, Alitalia posted a loss of €812 million in 2004. The carrier is expected to have also posted a loss in 2005.

The airline's management insists its restructuring plan is necessary to guarantee the company's longer term prospects.