Alitalia Board Meets After Talks Fail

Even if the airline sought bankruptcy protection, it could continue flying while it developed a financial reorganization plan.

The Alitalia board convened an emergency meeting at its headquarters, where about 300 Alitalia workers gathered outside chanting "We want Air France" and demanding the return of chairman Maurizio Prato.

The government, meanwhile, said it would try to determine whether there was still a chance to coax Air France-KLM and unions back to the bargaining table. Barring that, analysts said bankruptcy protection appeared the most likely outcome.

Alitalia's unions, which presented proposals that Air France-KLM chairman Jean-Cyril Spinetta said were "incompatible" with plans to return the airline quickly to profitability, planned a news conference for later Thursday. Spinetta had made his company's take over of Alitalia conditional on the acceptance of Alitalia's strike-prone unions.

Both sides, however, appeared to leave open the possibility of a return to talks in their statements Wednesday night although how that would be achieved is unclear at this point.

In a measure of the severity of the crisis, the Milan Stock Exchange suspended the company's shares, which have been on a bumpy ride, regularly swinging beyond the exchange's 10-percent limit in both directions, in recent weeks as the sale of Alitalia has become embroiled in parliamentary elections, scheduled April 13-14.

Opposition leader and former Premier Silvio Berlusconi, who has been leading in the polls, has said he was gathering a group of investors to make an alternative deal, but he hasn't publicly named them. Some of his remarks have brought the scrutiny of Italy's stock market regulator.

Economics Minister Tommaso Padoa-Schioppa told a parliamentary committee on Wednesday that if the Air France-KLM plan failed, bankruptcy protection would be the only solution. He said the time for an alternative buyer had passed.

Under terms of the law tightened after the 2003 failure of dairy giant Parmalat, a government-appointed administrator would be named to run Alitalia, which would be granted protection from its creditors and suppliers, but only under terms of a business plan guaranteeing the company's return to profitability with radical restructuring. The plan, which must be written within 180 days, could cover a period of years.