Italy seeks last-minute deal to save Alitalia

By Robin Pomeroy

ROME, Sept 14 (Reuters) - The Italian government scrabbled to save Alitalia from collapse on Sunday, less than 24 hours before the airline has said it might start cancelling flights as it cannot secure fuel supplies.

Emergency talks at the office of Prime Minister Silvio Berlusconi ran late into Saturday without breaking the deadlock between unions and a consortium of Italian investors that has agreed to buy profitable parts of the carrier.

"Alitalia: final call," ran the headline on La Repubblica daily. Talks were due to resume later on Sunday between ministers and unions.

Italy's civil aviation authority said on Saturday that Alitalia's operating licence was at risk after the airline confirmed media reports that it was having trouble buying jet fuel from wary suppliers.

Letting Alitalia collapse would be a huge political blow for Berlusconi who promised voters he would use his business contacts to find an Italian buyer for the near-bankrupt airline.

Unions have rejected the terms of the takeover offer which would mean thousands of job cuts and lower pay as the airline would be reborn as a smaller carrier, stripped of loss-making operations and its debt pile.

But with the other option likely to be the total collapse of the airline, where all 20,000 employees would lose their jobs, unions hinted there was some room for manoeuvre.

"We all need to have a bit more flexibility and find a balancing point, everyone giving something up," Raffaele Bonanni, head of the CISL union, told Il Giornale daily.