Alitalia's biggest unions clinched an initial deal with the airline's potential buyers yesterday, raising hopes it could avoid collapse, but pilots balked and flights risked being grounded for a lack of cash to buy fuel.
Italy's four main unions - CGIL, CISL, UIL and UGL - and a consortium offering to buy Alitalia agreed to the rough outline of a rescue plan that would cut about 3,000 jobs but leave 12,500 workers at the slimmed-down airline.
Thousands of others are in units that would be spun off. "It's a first, important step," said Raffaele Bonanni of the CISL union.
But it was not clear whether other, smaller unions representing pilots and cabin crews would agree to the deal being negotiated by their peers. They initially scoffed at the agreement and questioned why they were excluded from talks.
Industry Minister Claudio Scajola warned there were "only a few hours left" to save Alitalia, whose shares have been suspended since June.
Negotiations on tricky issues like salary cuts were set to resume in the late morning, with no guarantee of success.
"The persistent problem which could, if not resolved, cause this initiative to fail is the new job contracts," said Labour Minister Maurizio Sacconi, confirming the figures on job cuts. The civil aviation authority said at the weekend Alitalia's operating licence was at risk after the airline confirmed it was having trouble buying jet fuel from wary suppliers.
Still, traffic at the main international airports in Rome and Milan was normal yesterday, airport officials said.
ENI chief executive officer Paolo Scaroni said the Italian oil company would not give Alitalia fuel without cash up front.
"Not even if Berlusconi or the Pope asks me to," Mr Scaroni told La Repubblica newspaper. "(Eni) cannot supply fuel to airlines if they cannot pay cash. There is no moral suasion - international agreements are clear."
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.
The airline, which is operating under a bankruptcy commissioner, has not been in profit since 1999 and had nearly €1.2 billion in debt as of July.
"I feel bad for the Alitalia staff but really we are hearing the death notice for something that we knew has not been working for many years," said Rome resident Michele Antonucci, as news of its possible liquidation dominated Italian media.
Chronology of Alitalia's troubled sale process
December 2006 - Initial auction
The centre-left government of Romano Prodi announces it is putting its 49.9 per cent Alitalia stake up for sale. The state seeks bids for at least 39.9 per cent of the carrier, which would automatically trigger a full bid under Italian takeover law.
There are 11 bidders initially but the auction collapses in July 2007 as they gradually pull out, with small Italian carrier Air One the last to do so.
December 2007 - Second try
Alitalia draws up list of six potential partners. Franco-Dutch carrier Air France-KLM and Air One put in non-binding bids. The government ignores lobbying by unions and regional politicians to pick Air France-KLM for exclusive talks.
The two airlines agree on takeover that values Alitalia shares at 10 euro cents, or $184 million, an 81 per cent discount to the price they are trading at the time. Criticism from the then leader of the opposition Silvio Berlusconi during the election campaign, plus a lawsuit by Milan's airport operator, puts the deal at risk and it ultimately falls apart over union opposition.
April 2008 - Third time not so lucky
Returning to office as Prime Minister after winning an April election, Mr Berlusconi launches a third attempt to secure Alitalia's future, promising to find a group of Italian investors to buy it. Normal disclosure requirements on the sale progress are waived and Alitalia shares are suspended indefinitely in June.
His new centre-right government asks bank Intesa Sanpaolo to draw up a plan, which eventually has Alitalia seeking bankruptcy protection under a new process for "public service" companies on August 29.
Mr Berlusconi's Cabinet suspends antitrust laws and overhauls a bankruptcy law to accommodate the rescue. It hires a special administrator to sell assets to a single buyer of his choice rather than the highest bigger.
An investor group led by Roberto Colaninno called Compagnia Aerea Italiana (CAI) on September 3 submits an offer for parts of Alitalia to create a smaller airline with the help of Air One.
The plan's success is dependent on union approval and a partnership with a foreign airline and the administrator gives unions until September 11 to accept the plan, warning he will liquidate the airline if they refuse.
The would-be buyers suspend the takeover on September 12 in the face of union opposition, halting due diligence.
Alitalia says it may have to ground flights from September 15 as it cannot secure fuel from wary suppliers and Italy's aviation authority says that puts its operating licence at risk.
Emergency talks are held to seek a last-minute deal.