Italy's Air One and European giant Air France-KLM on Monday unveiled details of their rival bids for Alitalia, with both proposing a major overhaul of the near-bankrupt Italian flagship's ageing fleet.
Air One said it would inject one billion dollars (1.4 billion dollars) up front into Alitalia and spend 4.3 billion euros to upgrade the fleet. For its part Air France-KLM said it was offering a share swap as well as a major aircraft upgrade.
The Anglo-Dutch airline, a long-time ally of Alitalia, said in a statement that it would launch a capital raising exercise for at least 750 million euros, adding that upgrading Alitalia's fleet "would be first among its priorities."
The Italian government, which holds 49.9 percent of Alitalia, has been seeking a buyer for the airline which is losing around one million euros a day. However, the process has been hit by delays and an earlier tender process-which included Air One, but not Air France, which feared red tape and clashes with the unions-collapsed in July when all credible buyers pulled out.
Alitalia's board of directors planned to meet on Tuesday to decide which offer to pursue. Italian Prime Minister Romano Prodi said earlier this month that the nationality of Alitalia's future owner was of "secondary" importance to the soundness of the rescue plan.
The Italian financial newspaper Il Sole 24 Ore said the Air One bid would be preferable to labour. The company's share price was in free fall on Monday, forcing two suspensions. Shortly after trade resumed, the share price dropped 12 percent to 0.66 euros.
Air One chairman Carlo Toto said in an interview with Monday's Corriere della Sera that Alitalia's planes have "maintenance and fuel costs that are decidedly too high. "The strong point of our proposal is the planes," said the boss of Italy's second largest airline. "We plan to renew 130 of them, at a rate of 26 new planes per year."
He added: "The goal is to make the new Alitalia number four in Europe, a company that should reach financial equilibrium by 2009 and begin turning a profit in 2010." Unions hope for a speedy resolution to a long-running crisis but are wary over the consequences of restructuring. Regarding the sensitive issue of layoffs, Toto recognised that Alitalia staff had become "a bit demoralised" but cuts would be made using "social softeners."