Alitalia board adjourns talks on fate to next week

ROME, July 20 (Reuters) Loss-making Italian carrier Alitalia today adjourned to next week a board meeting discussing its future and dwindling options following the collapse of its seven-month auction.

Alitalia, which the Rome government has warned could be shut down unless a buyer is found, set a board meeting for July 27 to finish talks it began over an industrial plan to guide the ailing airline in coming months.

Sources familiar with the matter have said the airline is working on a contingency plan for the next year focused on redesigning its network and curtailing losses.

The plan would aim to increase revenues by 100 million euros and slash losses by cutting connecting flights to concentrate on point-to-point tickets, the sources said.

Alitalia last month said continuing operations depended on the outcome of its sale process, though it maintained it had enough cash to stay afloat for more than a year.

The Italian Treasury -- Alitalia's controlling shareholder -- had asked the airline's board to draft guidelines for a business plan for the next three years despite the sale process; its last plan was abandoned in January when the auction began.

Alitalia's scramble comes as the Treasury also desperately searches for alternatives to allowing the national carrier to go bust.

The government has suggested it might try direct talks with one-time suitors to keep sale hopes alive after the auction was called off on Wednesday, when the last remaining bidders pulled out ahead of a deadline for final offers.

All three final contenders in the airline's auction -- Air One, Russia's Aeroflot and a consortium of U.S. private equity groups TPG and MatlinPatterson -- have suggested they could be tempted back should Rome change widely criticized conditions imposed on the sale.

Alitalia, which loses more than a million euros a day, is burdened by strikes, inefficiency and frequent political interference.

It will soon need a fresh injection of cash after writing down its fleet in May, which triggered a capital increase under Italian law. But the European Commission has said Rome cannot cough up the money this time.

The Italian government, fresh from striking a deal with unions over pension reforms, did not discuss Alitalia at its cabinet meeting earlier today, a minister said.

But it will talk about it on Monday, the transport minister told local news agencies.

REUTERS MP PM0138