The Italian government scrambled for a deal with airline workers yesterday, negotiating into the night in a bid to save Alitalia from collapse.
With Alitalia's operating licence in jeopardy and the likelihood that it will have to ground flights from today due to a lack of fuel, the airline's unions faced a stark choice between a rescue plan with job and salary cuts and pushing the carrier into liquidation.
Labour Minister Maurizio Sacconi spent the weekend in intense talks with unions and the business consortium that has offered to buy profitable parts of Alitalia, hoping to reach a deal he could announce overnight or early today, a source close to the talks said.
Once a symbol of Italy's post-war boom, Alitalia has for years suffered from political interference, labour disputes, financial woes and most recently from soaring fuel costs - which are weighing on airlines around the world.
Britain's third largest package holiday operator, XL Leisure Group, grounded all flights on Friday after going into administration. Discount transatlantic carrier Zoom Airlines began bankruptcy proceedings last month.
Unions have so far rejected the consortium's plan to buy the flight operations of Alitalia and relaunch it as a slimmed down regional carrier - a strategy that would mean thousands of job cuts and reduced salaries.
But with liquidation the only obvious alternative, they appealed for a compromise.
"We are trying to get a solution to this saga and there are still many obstacles, but the climate is different and there is the awareness that there is no alternative to the deal," said Giuseppe Caronia, head of the UILT union.
"I am moderately and cautiously optimistic."
At Rome's Fiumicino airport, several hundred Alitalia workers staged a protest, temporarily blocking passengers' way to check-in desks of various airlines. "Today it's us, tomorrow it will be you," they chanted to employees of other airlines.
Italy's civil aviation authority said on Saturday that Alitalia's operating licence was at risk after the airline confirmed media reports that it was having trouble buying jet fuel from wary suppliers.
Alitalia is operating under a bankruptcy commissioner who has said the only alternative to the rescue plan is liquidation, a procedure he has held back from starting while talks go on.
An Alitalia collapse would be a huge political blow for Prime Minister Silvio Berlusconi who promised voters he would use his business contacts to find it an Italian buyer.
La Stampa daily said there was a "firm belief that a collapse would be a serious blow not only for the government but also for unions, workers, employers and, in fact, the entire country".
The investor group CAI has said publicly it would not give any more concessions but La Repubblica said CEO Roberto Colaninno had improved his offer on salaries, reducing pay cuts to 20 per cent, from around 25 per cent.
In April, Alitalia's unions sank a deal agreed under the previous, centre-left, government to sell the airline to Air France-KLM, a deal that Mr Berlusconi, then in opposition, said he would block if he came into power.
The state holds a 49.9 per cent stake in the airline and its publicly traded shares have been suspended since June. Alitalia has not been profitable since 1999 and had nearly €1.2 billion of debt as of July.