April 22, 2008 3:00 am
Air France-KLM last night withdrew its offer to buy Alitalia, presenting the incoming government of Silvio Berlusconi with the prospect of persuading an unwilling Italian consortium to take over the loss-making airline or start bankruptcy proceedings.
Air France-KLM said in a one-sentence statement that it no longer considered valid the binding offer it made on March 14 because its preconditions had not been met.
Those conditions included acceptance by the incoming government and the trade unions, and the dropping of a €1.2bn ($1.9bn) legal suit by SEA, the company that manages Milan's Malpensa airport. None was met.
The outgoing centre-left government, which was defeated at the polls last week and will hand over power in early May, had been scheduled to meet today to agree on a bridging loan of €100m to €150m for Alitalia to keep the airline afloat until the new government could restart talks with Air France-KLM.
A government insider said he expected that loan to go ahead, as it was determined that if Alitalia were to go bankrupt it would happen under Mr Berlusconi's watch, since he had campaigned on a rejection of the foreign takeover.
The statement by Air France-KLM did not rule out a reopening of talks, but analysts said that it appeared to signal a final withdrawal.
Jean-Cyril Spinetta, head of Air France-KLM, broke off talks with the unions in Rome earlier this month after they rejected his restructuring plans, involving 2,100 job losses.
The government of Romano Prodi had already accepted the offer and, until last night, Air France-KLM had kept it on the table in the hope that the unions may relent.
Mr Berlusconi, the billionaire opposition leader who will become prime minister for the third time, repeatedly promised voters that he would find a better Italian alternative. His nationalist rhetoric helped to secure votes in the north of Italy.
Sources close to Mr Berlusconi said after the election that he would try to reopen talks with Air France-KLM because Italian industrialists were resisting pressure to make an offer before the debt-ridden airline was put into bankruptcy.
Bankruptcy would be a politically humiliating outcome for Mr Berlusconi, who is expected to exert all the influence he can to find an Italian buyer.
Bank Intesa Sanpaolo, which had previously backed a failed bid by Air One, a smaller domestic airline, was quoted as saying yesterday it might be interested in taking another look.
Alitalia's financial position had deteriorated seriously since Air France-KLM made its offer five weeks ago, because it had no hedging in place for its fuel requirements while prices of jet fuel had soared.
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.