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ROME - Air One has pulled out of the bidding for Alitalia, citing impossible conditions, leaving Rome's plans to auction the loss-making carrier in tatters ahead of Monday's deadline for final offers.
The departure of domestic carrier Air One leaves only US fund MatlinPatterson - which has been tagged as lifeless by a minister - and raises questions on whether a different procedure for the crucial sale is needed.
"The privatisation has basically failed given that the only credible suitor has withdrawn," said Mauro Rossi, head of one of Alitalia's major unions FILT-CGIL.
MatlinPatterson declined to comment. Few expect the US fund to bid, including Italy's Transport Minister, Alessandro Bianchi, who said it had given few signs of life in the tender.
Failure to sell loss-making Alitalia would be a big setback for Prime Minister Romano Prodi's centre-left government, which put the airline up for auction seven months ago in an attempt to sort out its problems after previous efforts to turn it around failed.
And it would come as the Government, which was elected just over a year ago with a wafer-thin majority, slumps in the polls and struggles to reach agreement with unions on key pension reforms.
Rome has been criticised for adding to Alitalia's woes by imposing restrictive sale conditions.
Air One, a small carrier with annual revenues that barely match Alitalia's annual losses, joined that list yesterday. "The conditions presented in the contract do not allow ... the development of a strong entrepreneurial project to revive and relaunch Alitalia," Air One said. But it would continue to monitor developments.
Air One had asked for changes that would have allowed it to back out of a deal if antitrust authorities imposed onerous conditions, a source closely involved said, and if it was unable to reach a deal with Alitalia's strike-prone unions, according to Italian newspaper Il Sole 24 Ore.
Alitalia's long-time commercial partner, Air France, has snubbed the auction. That has not stopped Italian media from speculating the Dutch-French carrier could still come to the rescue.
Analysts say the future of Alitalia, which has a market value of about US$1.5 billion ($1.9 billion), could be in jeopardy if the auction collapses.
The airline needs another cash injection after writing down its fleet in May, but any attempt by Rome to pump in more money would meet stiff resistance from the European Union and would be unpopular politically.
Prodi's political opponents were quick to take advantage of the latest setback.
"Now that the privatisation plan for Alitalia is fading, the future looks extremely bleak," said opposition leader Gianfranco Fini, who heads the National Alliance party.
- REUTERS
