Alitalia filed to be put under special administration for the second time in less than a decade, starting a process that will lead to the loss-making Italian airline being overhauled, sold off or wound up.

The company’s board took the formal decision on Tuesday after workers rejected its latest rescue plan last week, making it impossible for the airline to secure funds from shareholders to keep its aircraft flying.

The government appointed three commissioners to assess whether Alitalia can be restructured, either as a standalone company or through a partial or total sale, or else liquidated.

Rome also threw the airline a short-term lifeline by guaranteeing a bridge loan of 600 million euros ($655 million) for six months to see it through the bankruptcy process.

“We wanted to protect ticketed passengers and Alitalia’s workers until a suitable buyer is found to preserve the value of a company that has such a legacy brand and is so important for domestic connections,” Transport Minister Graziano Delrio told reporters after a cabinet meeting.

The appointed commissioners include Luigi Gubitosi, who was set to become Alitalia chairman if the rescue had gone through, Enrico Laghi, who is also special administrator of troubled steel plant Ilva, and academic and engineer Stefano Paleari.

The three now have six months to devise a plan for Alitalia.

Justifying its decision to ask for administration, Alitalia’s board cited the airline’s serious economic plight, the unwillingness of its investors to refinance the company and the impossibility of finding a quick alternative.

The airline said its flight schedule would remain unchanged.

James Hogan, the CEO of Etihad Airways, which bought into Alitalia during the latest restructuring in 2014 and is now its largest single investor with a 49 percent stake, said in a statement the Italian airline required “fundamental and far-reaching restructuring to survive and grow in future.”

“Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest,” he said, adding Etihad would keep working with Alitalia as a commercial partner.

Alitalia is losing about 1 million euros a day and without the government loan risked running out of cash by the middle of May, sources said.

Rival airlines including Lufthansa (LHAG.DE) and Norwegian Air (NWC.OL) have shown little interest in buying Alitalia and creditors have refused to lend more money, putting more pressure on the government to find a way to save the flag carrier.

The government has ruled out renationalising Alitalia, an airline that was once a symbol of Italy’s post-war economic boom but is now struggling to compete at home against low-cost carriers and has not invested sufficiently in the more profitable long-haul routes.

Outraged at repeated bailouts that have cost taxpayers more than 7 billion euros over a decade, many Italians are urging the government to resist the political temptation to rush to its rescue again.

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

Former Prime Minister Matteo Renzi, who became PD leader again on Sunday in a primary vote, has said he will have a plan for the airline by mid-May and it should not be broken up.

Alitalia was privatized in 2008 after entering administration earlier that year.

 

Source: Reuters