Italy mulling liquidation of flagship airline Alitalia

NO THANKS: Rome has dropped plans to privatize the airline after all bidders dropped out. The sellers cited restrictive conditions set by the government

AP , ROME

Fri, Jul 20, 2007 - Page 10

Alitalia will have to be liquidated if it is not sold, the Italian economics minister said in an interview published yesterday, following the collapse of an auction to sell the state-controlled airline.

The government on Wednesday formally scrapped plans to privatize Alitalia after all bidders dropped out. The sellers cited overly restrictive conditions set by the government.

"Aside from the sale, there is only liquidation," Economics Minister Tommaso Padoa-Schioppa told Corriere della Sera. "It's a loss-making company, in which the government can't inject any more cash."

But he said that even though the auction failed, a sale is still possible.

"We are exploring alternatives," Padoa-Schioppa said.

"The sale option has not been exhausted," he said.

The Italian government is looking for a private investor to buy at least a 39.9 percent stake in the national airline.

However, the government is prepared to sell its entire 49.9 percent stake.

But Alitalia loses about 2 million euros (US$2.75 million) a day.

The company has been hurt by repeated strikes, high fuel costs and competition from low-cost carriers.

The latest walkout by its personnel on Wednesday cause the cancelation of 150 flights, according to unions.

Last month the airline reported a first-quarter net loss of 135 million euros, compared with a loss of 159 million euros in the same period last year.