Italian workers in clashes
ROME (Reuters) - Italy's government on Tuesday pledged tomaintain jobs and revenues at Milan's main airport to clear theway for Alitalia's sale to Air France-KLM, considered theItalian carrier's last shot at avoiding bankruptcy.
The airport deal came as Alitalia's first meeting withunions since agreeing to Air France's offer began with scufflesbetween police and aircraft maintenance workers protestingoutside Alitalia's Rome headquarters over expected job losses.
Before concluding a deal, Air France-KLM wants unions toapprove the offer and wants itself protected from a $2 billion(1 billion pounds) lawsuit against Alitalia over plans to halveflights at Milan's Malpensa airport.
The government said Malpensa's operator SEA had signed upto the airport agreement and urged it to drop the claim.
In a statement, the government said it had honoured itscommitment to maintaining revenues and job levels at theairport, without giving details. SEA had no immediate comment.
In Rome, Alitalia's management met the ailing airline'sunions to seek backing for the Air France-KLM takeover despitetheir hostile initial reception to the deal.
Air France-KLM CEO Jean-Cyril Spinetta warned the unions itwas not obliged to buy Alitalia. He acknowledged plans forAlitalia were "painful" but that they would allow it tosurvive.
A Reuters witness said police in riot gear, guarding theairline office where talks were taking place, clashed with acrowd of 300 to 400 workers from a company which carries outmaintenance on Alitalia aircraft. The Naples-based workersinsulted employees exiting the office and tried blocking exits.
Alitalia's board and Italy's outgoing government, whichholds a controlling 49.9 percent stake, have both approved theFranco-Dutch carrier's 138 million euro bid which also includesan offer for bonds and a 1 billion euro capital increase.
Apart from the unions, the fate of the deal also rests withItaly's next government, to be elected in April, whose blessingAir France-KLM wants before wrapping up the sale.
JOB FEARS
Air France-KLM's share swap bid valued Alitalia at under 10euro cents a share -- less than a fifth of its market valuebefore the deal was announced.
Alitalia shares were suspended limit down at the start oftrade and fell 22 percent when trading resumed, touching arecord low of 27 euros cents at one point. That follows a 27percent tumble on Monday on the lower-than-expected bid price.
"After the agreement with Air France-KLM, Alitalia hasnothing more to give. What appeal can a company in such deeptrouble have for the market?" said a trader in Milan.
European Affairs Minister Emma Bonino said the alternativeto Air France-KLM's offer was bankruptcy, while politicians onthe right and far-left have attacked it as humiliating forItalian sensibilities.
The unions -- who were split over a French takeover whilethe two carriers were in exclusive talks -- have since unitedto complain bitterly about being kept in the dark over jobcuts, which they fear will be far more than initially expected.
The head of the Cisl union, Raffaele Bonanni, said heestimated job losses from the deal would touch 7,000 includingcuts at Alitalia's troubled ground services unit.
Spinetta confirmed job losses related to the carrier'sairborne activities would be limited to about 1,700, or about15 percent of those operations. Alitalia has a total workforceof around 19,000 including its ground service operations.
One pilots' union that had favoured the deal changed itsmind after learning of planned cuts to the cargo unit.
Italy's flagship carrier has not posted an operating profitfor nine years and is bleeding cash at a rate of more than amillion euros a day. It is selling off assets and has warned itneeds at least 750 million euros by mid-year.
(Additional reporting by Gilles Castonguay and AlessandraFarina in Milan; Editing by Keith Weir and David Cowell)