Alitalia takeover collapses as talks with unions fail

Air France-KLM’s takeover of Italy’s Alitalia fell apart Wednesday after talks with unions broke down, leaving the state-owned airline on the ropes just 11 days before a general election.

Alitalia, once a proud symbol of Italy’s postwar economic boom, now risks bankruptcy, and its fate has become a top political issue.

“This company is cursed: only an exorcist can save it,” Alitalia Chairman Maurizio Prato was quoted by unions as saying after the negotiations collapsed. Alitalia later said he had resigned.

Air France-KLM, long considered Alitalia’s best hope of reviving its fortunes, said conditions did not exist for further talks but it continued to believe in the project.

Alitalia, which has debt of $2.14 billion, said it needed a cash injection by midyear to keep flying.

Italy’s outgoing center-left government, which is trying to sell its 49.9% stake in the carrier, had approved the takeover two weeks ago. But the deal ran into resistance from unions, poll favorite Silvio Berlusconi and Milan’s airport operator.

Air France-KLM Chief Executive Jean-Cyril Spinetta flew back to Paris -- on an Alitalia jet -- Wednesday after rejecting union demands to take on the airline’s ground service unit, speed up plans to buy new planes and keep its cargo unit open, union sources said.