Berlusconi Looks to Germany's Lufthansa to Save Alitalia

Alitalia is on the verge of liquidation and talks on saving the Italian airline have been dragging on.

The only offer so far -- from Italian consortium CAI -- has been approved by four of the nine unions at Alitalia. The remaining five unions opposed the deal, calling it "useless and provocative." Pilots and cabin crew were among those opposed to the potential deal.

Under the rescue plan, Alitalia would merge with Italy's second biggest airline, Air One. The number of personnel would be 12,500 -- down from the two airlines' combined workforce of 20,000.

The unions have to recognize that there's no other way, Berlusconi told Italian news agency ANSA on Monday, Sept. 15.

"The alternative is bankruptcy and the loss of 20,000 jobs," he said.

Lufthansa to the rescue

Berlusconi said he wants a restructured Alitalia to establish alliances with international airlines, and has named Germany's Lufthansa as the favored option.

But the prime minister added that foreign airlines would only be able to buy minority stakes in the Italian carrier. The Italian government owns 49.9 percent.

Lufthansa announced on Monday that it's taking over Belgium carrier Brussels Airlines and will pay 65 million euros ($92 million) for a 45 percent stake. Lufthansa can then acquire the rest in several years.

Lufthansa CEO Wolfgang Mayrhuber wouldn't comment on whether the airline was considering taking over Alitalia, or two other carriers, Austrian Airlines and SAS.

But Mayrhuber did say Lufthansa was in relatively "good shape" in comparison to other carriers.

"I'm not surprised our name is being mentioned," he said on Monday.

Air France-KLM has also been named as a possible partner for Alitalia, but it walked away from takeover talks earlier this year after Italy's trade union rejected the terms of the deal. Air France-KLM has a 2 percent interest in Alitalia.

In the red

Alitalia is currently losing 2 million euros every day. Soaring fuel prices have only added to the airline's woes, linked to political interference, union disputes and mismanagement.

The airline is now having trouble buying fuel. Suppliers are wary but so far Alitalia hasn't had to cancel any flights.

Paolo Scaroni, chief executive of Italian oil company ENI, said he would not provide Alitalia with fuel unless there was cash up front.

"Not even if Berlusconi or the pope asks me to," he told Italy's La Repubblica newspaper.