Alitalia Airlines Rescue Plan

Alitalia pilots were agreed to the rescue package for the airline proposed by the Italian Air Company investor group, boosting hope that Italy's national carrier may survive. The agreement which settles issues such as the pilot's work contract was backed by the four main trade unions after nearly 12 hours of uninterrupted negotiations with the government.

Alitalia's 900 captains will have contracts that differ from those of the other staff members, while other pilots' contracts will be the same as those of the rest of the airline personnel. Talks with the airline's flight attendants who have not agreed to the package will be held on Monday.

After allowing two deadlines to lapse for the four diehard unions to come on board, no new time limit had been set. A government official had told reporters earlier: "Negotiations continue (and) the hands of the clock have been stopped."

The package proposed by the Italian Air Company (CAI) investor group has won the backing of the bulk of Alitalia's workforce, represented by five of the failing airline's nine unions. The deal could go ahead without all unions on board, Labour Minister Maurizio Sacconi had told. Unanimous approval "would be important... but I think CAI can pursue its course in any case," he said.

Italy's powerful CGIL union dropped its objections to the rescue plan on Thursday, prompting the CAI to revive its US$1.45 billion offer for the flag carrier, valid until October 15. The left-wing union had rejected an accord reached last week with three other unions but reportedly won last-minute concessions on pay for ground crew, leave and temporary work contracts.

Meanwhile, with Alitalia's "Made in Italy" rescue plan within reach, CAI was stepping up contacts with potential foreign partners Air France-KLM and Lufthansa.

Air France-KLM, which dropped a takeover bid for Alitalia in April in the face of union resistance, is considering acquiring a 10 to 20 per cent stake in the relaunched Alitalia, industry sources said. The European giant already holds a two percent stake in Alitalia.

Meanwhile, Lufthansa chief Wolfgang Mayrhuber was in Rome on Friday "at the request of the Italian government," an airline spokeswoman told AFP, adding that he had met with union representatives.

Some union leaders are reportedly attracted to Lufthansa because it operates from more than one hub, like Alitalia, whose Milan hub has seen drastic cutbacks. Alitalia, 49.9 per cent state owned, is losing about three million euros a day and has debt of about 1.2 billion euros.

Under the rescue plan, CAI would take over Alitalia's passenger activities and merge them with Italy's number two airline Air One. Alitalia's debt would be assumed under the umbrella of the company's remaining activities, which would be liquidated, throwing the burden on the Italian taxpayer.

Some 12,500 workers of the two sections would be rehired by CAI, while 3,250 would be laid off. The government has promised compensation over seven years for those who lose their jobs.