Bailout or bust? Alitalia divides a nation, paralyses Rome

By Giselda Vagnoni and Agnieszka Flak

ROME/MILAN (Reuters) - Italians are watching their flag carrier Alitalia go into yet another financial tailspin, and a growing number of them believe it would be better for the country if it crashed.

Outraged at repeated state bailouts that have cost taxpayers more than 7 billion euros ($7.62 billion) over a decade, many Italians are taking to social media to urge the government to resist the political temptation to rush to its rescue again.

"In electoral terms, Alitalia is worth nothing. It's a dead weight," Angelino Ghinelli tweeted into a social media storm that has not gone unnoticed in Rome, where ministers have so far shown a strong reluctance to make any guarantees.

"Enough with saving Alitalia," wrote Cinzia Briguglio, one of around 1,000 signatories to an online petition that sprang up this week, calling for the government not to get involved.

Consumer groups have also chimed in, including one, Codacons, which has threatened to ask Italy's Corte dei Conti, a judicial auditor, to examine any state bailout. The court can fine officials, including ministers, for wasting public funds.

An opinion poll published on Friday, four days after Alitalia workers voted to reject a union-backed rescue plan proposed by management, shows that 77 percent of Italians believed the airline should be left to fail.

"It's clear Italians are opposed to governments systematically running up deficits to deal with companies in crisis," Natascia Turato, director of Index Research, said in a comment the firm posted online, along with its poll results.

Without state support, Alitalia appears headed for collapse. Rival airlines show little interest in buying it, and creditors refuse to lend more money after workers last Monday voted down a rescue plan that would have cut 1,700 jobs and trimmed salaries.

Rome has thrown Alitalia a short-term lifeline, a bridging loan of up to 400 million euros to see it through a bankruptcy process, under which an administrator will decide if it can be sold as a going concern or should be liquidated.

However, the government has ruled out renationalising the former state-owned business, once a symbol of Italy's post-war economic boom but now struggling to compete at home against low-cost carriers Ryanair and EasyJet.

Italian Finance Minister Pier Carlo Padoan has gone a step further, saying the government is unwilling, directly or indirectly, to invest any capital in it.

But with a general election due by May 2018, few Italians believe the ruling Democratic Party will really stand by and watch Alitalia crash and its 12,500 workers lose their jobs.

READING THE MOOD

Former prime minister Matteo Renzi, who is charting his way back to power, has said he will come up with a plan to rescue the airline by mid-May, assuming he emerges from this weekend's Democratic Party primaries as its newly re-elected leader.

The hardening of public opinion against Alitalia, though, makes the political calculations difficult -- and neither Renzi nor his party's main political rival, the 5 Star Movement, has advanced any concrete proposals for Alitalia.

Five Star's leaders have refused to be drawn on whether they would be willing to see public money put into the company.

"This time around the public is very divided on the issue which makes things difficult," said Andrea Giuricin, transport expert at Milan's Bicocca university and author of "The endless privatisation of Alitalia".

"This is why political parties like Five Star or politicians like Renzi don't yet have a clear position on the issue, are not yet certain what stand to take."

Opinions on the street are sharply divided.

"I haven't flown Alitalia in years. Do we need a domestic flag carrier? I don't think that's necessary these days," said Giulio Alesi, a Milan-based management student.

In Rome, where most of Alitalia's employees live, it is easy to find people who want the government to mount another rescue.

"I am absolutely for Alitalia being nationalised so that workers can keep their jobs under decent contractual terms," said Raffaele Di Giacomo, a salesman in a hardware store.

However, some trade unionists sense there is a strong current of public opinion against a state-funded bailout.

"I know people are against the state to jump in," said Antonio Piras, leader of Fit-Cisl, one of the trade unions that backed the management rescue plan. "But an electoral campaign is already on and this is a moment when anything can happen."

($1 = 0.9184 euros)

(Editing by Mark Bendeich and Ros Russell)