Suggests French Carrier May Be Considering Bid For Failing Italian Airline

Air France-KLM's CEO Jean-Cyril Spinetta has resigned his position on Alitalia SpA's board, and generated speculation the French carrier may submit a bid for a controlling stake in Italy's failing national airline.

In an emailed statement to Bloomberg, Air France-KLM said  "since the Italian government has called for bids to acquire stakes in Alitalia and as Air France-KLM is a partner of Alitalia," Spinetta can't be a member of Alitalia's board.

Italy's government is seeking bids to purchase its share in Alitalia after years of trying unsuccessfully to turn the carrier around. Last month officials said the government would sell at least 30.1 percent -- a controlling stake under that country's laws -- and set a January 29 deadline for bid submissions.

Alitalia CEO Giancarlo Cimoli and government representative Giovanni Sabatini remain as directors of the airline's board. The carrier's charter requires at least three members on the board to function.

Air France already owns approximately two percent of Alitalia and the pair have been in talks to increase cooperation since November -- they already share codes.

According to Bloomberg, Air France is lobbying the Italian treasury -- holder of 49.9 percent of Alitalia -- to change the sale conditions. Industry observers say the French airline won't make an offer unless the treasury changes them.

Among those esoteric conditions: the protection of Alitalia's "national identity," and the "quality and quantity" of domestic service.

Alitalia pushed hard to be a part of the 2004 Air France-KLM merger engineered by Spinetta, but it was excluded because of continuing red on its financial reports and troubling labor issues. The airline hasn't shown a profit since 2002.

FMI: www.alitalia.com