Despite Pope's blessing, ailing Alitalia is living on a wing and a prayer
Pope Francis may need a new favourite airline as Italian flag carrier Alitalia hovers on the brink of insolvency.
The airline is preparing for special administration proceedings after workers rejected the terms of a rescue plan that investors led by biggest shareholder Etihad Airways, said was a prerequisite for a desperately needed €2bn financing deal.
The workers' bet that Italy's government would step in at the last minute have backfired, with shareholder Intesa Sanpaolo saying there was "no plan B" heading into the weekend.
Alitalia has been bailed out by Italy and private investors repeatedly over the years but Italy's industry minister has ruled out nationalisation and public funds for the carrier.
The ailine has made a profit only a few times in its 70-year history and, with around 12,500 employees, is losing at least €500,000 a day.
It said after a board meeting it would "start preparing the procedures provided by law" and a person close to the company said the board would seek shareholder approval to request the appointment of a special administrator. "It is not an option but a must," the person said, adding, "The board ... can only do what it has to do."
The administrator would assess whether Alitalia can be overhauled or should be wound up, before preparing industrial and financial plans for a rapid revamp, either as a standalone company or through a partial or total sale. If all else fails, it could trigger liquidation.
The source said no offers had been received to buy either all or part of Alitalia.
Malyasian Airways has indicated its interested in Alitalia's planes, but not the business.
A shareholder meeting to decide on the next steps, initially announced by the company for last Thursday, will be held on May 2, two sources close to the matter told Reuters. Alitalia's flight operations remain unchanged for now, the company said in a statement.
The airline has sufficient funds to keep flying for "a matter of weeks, two to three weeks", partly by calling in unpaid invoices, the person close to the company said.
Vice chairman James Hogan said that the outcome of the ballot meant "all parties would lose: Alitalia employees, its customers and its shareholders, and ultimately also Italy."
Alitalia had sought worker backing to unlock fresh funds from shareholders and launch an ambitious restructuring plan, centred around a revamp of its business for short and medium-haul flights and additional long-haul routes. But workers had repeatedly said they were unwilling to accept any further sacrifices given labour costs were already among the lowest in Europe for a so-called legacy airline.
They were also sceptical over its plans to return to profit by 2019 given a string of past failed restructurings.
But the negative vote left the rescue plans in tatters, at least for now, and plunged the airline into a mood of defeat. "Everyone is disappointed and sad. It is unbelievable," the person close to Alitalia said. (Reuters)