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  • ITALY: Italy moves to save face as Alitalia auction fails

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ITALY: Italy moves to save face as Alitalia auction fails

Italy's government was struggling on Wednesday (July 18) to keep Alitalia out of administration and save face after Prime Minister Romano Prodi admitted the airline auction had flopped, suggesting one-to-one talks to lure buyers. Opposition leaders were quick to criticise the centre-left government, which has slumped in polls and is in the midst of difficult negotiations over pension reform with unions. The government said it would look at all options, including opening direct talks with former bidders, to keep hopes of a sale alive and avoid the unthinkable -- putting Alitalia into administration since Brussels will not allow another bailout. Strike prone unions had also complained about the auction failure, fearing forthcoming buyers can slash jobs. All three final bidders shortlisted in the auction suggested they could tempted back if terms were changed. U.S. funds MatlinPatterson and TPG are ready to reconsider an offer under different terms and are co-ordinating closely, sources close to the matter said on Wednesday. Another former bidder, Russia's Aeroflot, said its interest in Alitalia was "not casual" and it would consider re-bidding if the terms were changed, sentiments echoed by domestic carrier Air One when it pulled out citing restrictive sale terms. Italy had set much-criticised conditions such as requiring a buyer to maintain the carrier's "Italian-ness" and, according to a source familiar with the matter, allowing Rome to do a post-acquisition review of the deal. Alitalia, which bleeds more than a million euros a day, will soon need a fresh cash injection after writing down its fleet in May -- and Rome would struggle to rescue it again. The European Commission said on Wednesday Rome could not dole out any further state aid to Alitalia. Shares in Alitalia, which has a market value of about $1.5 billion, fell as much as 8 percent before paring losses, closing 3.5 percent down at 775 euros.

ITN Source | July 19, 2007Watch more videos from ITN Source

Tags:. .criticise. .terms. .soon. .pulled. .according











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