Air France takeover plan for Italy's Alitalia stalls

03-04-2008

Air France takeover plan for Italy's Alitalia stalls
Italy's Alitalia moved closer to bankruptcy as Air France pulled out of a deal to buy the state-controlled airline.

Following the announcement, Alitalia's chairman Maurizio Prato quit on Wednesday saying the company was cursed.

Air France ended talks to buy the company after failing to reach an agreement with unions.

France's largest airline wants to make 2,100 job cuts as part of its takeover plan.

Air France chairman Jean-Cyril Spinetta said: "I regretfully acknowledge the breakdown in negotiations, which is none of our doing.

"This is a project I have profoundly believed in and continue to do so, because it would have ensured Alitalia a rapid return to profitable growth."

The board of directors are set to meet today at noon (BST) to discuss the future of the company. In January, Alitalia said it needed to raise 750 million euros by the middle of the year to stay afloat.

Alitalia's position is further complicated by Italian elections, which are due to be held April 13th-14th.

The Italian government owns a 49.9 per cent stake in the company and the airline has become a key issue in the run-up to the election, as outgoing prime minister Romano Prodi had pushed for the deal to go ahead.

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