"Alitalia is going through the worst moment in its history. The situation is totally out of control and I do not see any parachutes," Prodi said Tuesday to leaders of three Alitalia unions. "We have until January to hammer out a solution that can avoid bankruptcy."
Alitalia, in which Rome holds a controlling interest, is expected to lose about $380 million this year, the Times of London said.
Efforts to trim the payroll and privatize ground service have led to strikes, walkouts and vandalism. Just last week critical cables in two MD-80 jets were cut while the aircraft were in Naples for repairs. An inspection found the sabotage, which a pilot said could have led to a "massacre."
Meanwhile, the European Commission is putting pressure on Rome to stop bailing out the inefficient enterprise. It is considering whether a $1.5 billion "recapitalization" amounts to an illegal state subsidy.