Government may help Alitalia

An Italian government minister said yesterday the state might pump fresh cash into Alitalia if the airline's management and unions back a serious restructuring plan at crisis talks this week.

The European Commission in Brussels said Italy could not give loss-making Alitalia further state aid, but added that other options, such as a bridging loan, might be possible.

Italian ministers have openly warned that the national flag carrier, which is 62 per cent owned by the Treasury, might go bankrupt, pushing shares in the company to record lows.

European Affairs Minister Rocco Buttiglione said yesterday that the Treasury would not issue any more blank cheques for the airline and that it was up to Alitalia itself to clean up its act and then ask the market for badly needed money.

"The Treasury could then decide to subscribe to the issue, but if you start from the position that the Treasury must take part in a capital increase regardless, then you are making a mistake and it won't work," he told Radio Anch'io.

Talks among unions, management and government were due to resume later yesterday for a third successive day.

Alitalia's board meets today and sources close to the company said it might ask shareholders to discuss liquidating the firm or calling in outside administrators if the negotiations failed.