Unions have been concerned by plans for wage cuts and lay-offs [AFP]

Prospective buyers, unions and the government had been locked in last-ditch talks into Monday morning after the airline said flights could be grounded as fuel supplies dried up due to concerns over Alitalia's ability to pay their bills.

The rescue plan put forward by CAI, a consortium prepared to invest in a new revamped Italian airline, would have investors buying profitable assets and investing $1.4bn, but it also envisages wage cuts and lay-offs.

The deal was reached with the four unions after the consortium raised the number of personnel to be employed by the new Alitalia from 11,500 to 12,500.

Raffaele Bonnani, the secretary-general of the CISL union, one of the four signatories, said that the draft deal was as a "major first step to save Alitalia".

However, five other unions condemned the deal as "useless and provocative" and said it did not "represent Alitalia's work force".

'Supply difficulties'

Union sources quoted Augusto Fantozzi, Alitalia's special administrator, as saying on Saturday that as many as 12 aircraft could be grounded by Monday and that with no agreement with the nine Alitalia unions to save the airline from bankruptcy, he would be obliged to start dismissal procedures.

"Up to tomorrow [Sunday] we have guaranteed flights, but not on Monday because no-one will supply us with kerosene,"  Fantozzi was quoted as saying.

In a later statement, Fantozzi denied he had been so alarmist, but acknowledged that "there are risks of supply difficulties which could threaten certain flights".

He said that the crews of 34 aircraft, which were currently not being used by the company could be laid off from Monday, but added that he would only sack the entire workforce "when there is nothing else left to do".

Fantozzi, appointed last month when the airline asked to be declared insolvent, warned unions on Wednesday that if a deal on restructuring was not reached before Friday, Alitalia would be made bankrupt quickly and he would start dismissing staff.

National symbol

Alitalia, a national symbol for Italians since it was founded in 1946, has lurched for years from crisis to crisis, and from restructuring plans to the latest takeover rescue scheme.

Its collapse would be a severe political blow to Silvio Berlusconi, Italy's prime minister, who had promised before the last elections that he would keep it flying under Italian control.

Berlusconi returned to Rome on Saturday from the south of the country to oversee the crisis, accusing the political left of being behind the "unreasonable behaviour" of the employees.

The Italian government owns 49.9 per cent of Alitalia, which has been surviving on a state loan of $425m made at the end of April.

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