Italian Industrialists Back Out Of Deal To Save Bankrupt Alitalia Airlines

September 19, 2008 4:43 p.m. EST

Rome, Italy (AHN) - A deal by Italian industrialists to save bankrupt Alitalia Airlines from collapse failed Thursday and the airline canceled a number of flights from Rome's Fiumicino airport, spiking fears Friday that the carrier is headed into liquidation.

With the consortium of business men deciding not to bail the national airline out, pressure is mounting on Italian Prime Minister Silvio Berlusconi to step in to save what has been Italy's flagship airline for the past six decades. Alitalia directly employs 19,000 people and thousands of other jobs at Italy's main airports depend on the airline.

Alitalia also offers the largest number of non-stop flights between the United States and Rome, Italy and its closure would affect American airports as well.

If Alitalia fails, it will become the first major European airline to fail since 2001 when Swissair Group and Belgium's Sabena went under.

Alitalia filed for bankruptcy protection on Aug. 29, and warned that it was losing about $3 million per day and was low on cash to buy fuel. Up to 30 flights have been canceled, but Alitalia denied it had run out of fuel. It told Agency France Press the flights were canceled for "technical reasons."

On Sept. 5, the airline had posted on its website a notice to customers thanking them for their patronage and reassuring that the carrier would continue to "operate flights in accordance with its schedules, honor reservations and tickets," there was no update to this information on Friday.

Disputes between trade unions and the airlines have played a factor in the problems, along with mismanagement and, recently, high fuel costs, observers say.

However, the consortium of investors backed out Thursday after officials from the Alitalia's nine labor unions failed to back a plan to bail the airline out by the deadline.