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Air France-KLM offers concessions in Alitalia talks

Air France-KLM on Tuesday promised a revised plan for cutting jobs at Alitalia as part of its takeover of the carrier, marking its first concession in talks with the labor unions.

Air France-KLM CEO Jean-Cyril Spinetta, meeting unions in Rome to win their blessing for the deal, also offered to extend talks beyond a March 31 deadline as demanded by the unions, a union official attending the meeting said. But the Italian Treasury -- which owns a 49.9% stake in the carrier -- is opposed to prolonging the deadline, the official quoted Alitalia’s chairman as telling the unions, leaving the fate of any extension of talks unclear.

Three major unions sounded a positive note after the meeting. The Cgil union, which had earlier criticized the deal, said it was in favor of continuing talks with the Franco-Dutch carrier while the Fit-Cisl union called it a “useful meeting.” “The concessions will allow for the start of talks,” said Giuseppe Caronia, national secretary of the Uil Trasporti union. Still, two pilot unions said they were unsatisfied by Air France-KLM’s concessions.

More than a week after unveiling its deal to buy Alitalia, Air France-KLM is struggling to overcome resistance from unions, Milan’s airport operator and politicians campaigning ahead of an April general election, where the deal has become a hot issue. Air France-KLM had earlier said it wanted all obstacles to the deal resolved before March 31 or throw in the towel, but on Tuesday appeared to soften its stance with the offer to extend talks beyond that date. Talks with the unions are expected to resume Friday, after Air France-KLM has sent its revised proposal on job cuts, the unions said. The carrier in a statement said that it would outline measures showing that “no worker will be abandoned.” Air France-KLM current plans are to cut 2,100 jobs and take on less than half of the workers at Alitalia’s troubled ground services unit AZ Servizi. That had angered Alitalia’s unions, who want the number of job losses to be reduced by 40%.


The talks with unions came as speculation of a better offer from Air France-KLM, or of a possible rival bid for Alitalia, sent shares in the airline so high they were briefly suspended. They closed up 33% to €0.4615 on Tuesday. The head of Italy’s bourse regulator Consob ruled out a more permanent halt to trading in Alitalia’s shares on Tuesday and called on politicians to stick to facts in increasingly heated electioneering over Alitalia’s future. Alitalia holds a board meeting on Wednesday.

Air France-KLM would pay about two days’ worth of revenues for Alitalia in its share swap offer, which also promises a bond buyback and a €1 billion capital increase for the airline, which loses over €1 million a day. But the deal is conditional on approval by union, Italy’s next government and protection from any risk stemming from a $2 billion lawsuit against Alitalia over flight cuts at Malpensa airport near Milan, which is bidding to host Expo 2015. The deadline for selecting the host city is also March 31. On the campaign trail, opposition leader and current poll favorite Silvio Berlusconi has raised the possibility of an eleventh-hour Italian bid to rival that of Air France-KLM. The outspoken media billionaire has already said he would veto the Air France-KLM takeover if he becomes prime minister and even suggested his children might join a rival bid.

Outgoing Prime Minister Romano Prodi said on Monday that an Italian offer would be desirable but so far no serious bid had been made to counter that of Air France-KLM, which was approved by his center-left government earlier this month. Center-left leader Walter Veltroni, who will face Berlusconi at the ballot box, said Air France-KLM was the only option. Domestic airline Air One is ready to make another bid, its head Carlo Toto said on Saturday, but wants to look at financial details. Intesa Sanpaolo Bank, which sponsored Toto’s initial offer, has said there is nothing on the table. Italian newspapers speculated at the weekend that support for a local offer could come from a variety of families and companies but none has confirmed interest yet. Economy Minister Tommaso Padoa-Schioppa has said any new offer would have to be made within days rather than weeks because of the airline’s precarious financial situation. (Reuters)