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After two gov't bailouts, Italy's Alitalia airline is again bankrupt

By Doug G. Ware
After two gov't bailouts, Italy's Alitalia airline is again bankrupt
An Alitalia jetliner taxis in Miami in 1996 after sustaining damage to its nose cone in flight. Tuesday, the flagship carrier filed for bankruptcy after employees voted to reject a restructuring plan. File Photo by Jeff Widener/UPI | License Photo

May 2 (UPI) -- Less than a decade after twice being financially rescued by the Italian government, flagship airline Alitalia on Tuesday again filed for bankruptcy -- and now faces possibly the end of the line following a turbulent run of difficulties.

Alitalia, one of Europe's most troubled airlines in recent years, made the move after employees voted to reject the carrier's restructuring plan, which would have included job and salary cuts in an attempt to secure new funding.

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"Alitalia's shareholders meeting, convened today, noted with deep regret the outcome of the referendum among the employees," the airline said in a statement. "The negative vote has determined the inability to implement the relaunch and restructuring of the Company."

The Italian government on Tuesday approved Alitalia's proposal to again enter bankruptcy -- as well as more than $650 million in funds to keep the airline operating in the interim.

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"The Board of Directors ... having acknowledged the serious economic and financial situation of the Company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative, has decided unanimously to proceed with the filing," Alitalia's statement said.

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The move marks the latest obstacle for Alitalia in returning to profitability. In 2008, the Italian government rescued the carrier with a financial bailout -- and did so again in 2012. Without any assurance that the airline will survive this bout with bankruptcy, shareholders balked at the prospect of continuing to dish out money.

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"We have done all we could to support Alitalia, as a minority shareholder, but it is clear this business requires fundamental and far-reaching restructuring to survive and grow in future," James Hogan, an executive at Alitalia partner Etihad, said Tuesday. "Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest."

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In its previous bailouts, Alitalia even received the support of former Pope Benedict XVI, who regularly flew with the airline. Italian taxpayers have spent more than $7.6 billion over the last decade for the carrier's troubles.

Founded in 1946, Alitalia grew into one of Europe's largest carriers and flew mainly out of Leonardo da Vinci-Fiumicino Airport in Rome.

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