Italy's airline narrows losses

The struggling Italian national carrier Alitalia reported narrower first-quarter losses Tuesday as the airline reaches the final stages of a tender bid to go private.

Alitalia reported a net loss of 135 million euros ($180 million), compared with a loss of 159 million euros in the first three months of 2006.

Alitalia, which also reported a first-quarter operating loss of 91 million euros ($121.5 million), compared with a loss of 127 million euros in the same period last year, said it had enough cash to continue running its operations for more than 12 months.

Alitalia saw an increase in both passenger and cargo flights _ nearly 3 percent and 25 percent, respectively _ as well as fewer disruptions.

Italy's Treasury, which owns 49.9 percent of the airline, expects binding bids and turnaround plans by July 2. Two bidders remain: AP Holding SpA, which teamed up with Intesa Sanpaolo SpA, and OAO Aeroflot-Russian Airlines with Italian bank UniCredit SpA.

The company also said that it would implement a new three-year business plan in the event the sale should fall through.

Alitalia reported its fourth consecutive annual loss in 2006, equivalent to 626 million euros ($836 million), mainly due to a 197 million euros ($263 million) devaluation of its aircraft fleet.

The bidding process for Alitalia has been beset by concerns over a lack of data and shifting guidelines. Another group, a consortium formed by U.S. private-equity group TPG, dropped out of the bidding.

The government plans to sell at least a 39.9 percent share, but recently said it was prepared to sell its entire stake.

Under the latest terms outlined by the government, bidders must guarantee that Alitalia retain an Italian identity for at least eight years. Transport Minister Alessandro Bianchi estimated the buyer would need to spend 3 billion euros ($4 billion) to rescue the airline.

Labor unrest, including a series of strikes, high fuel costs, and competition from low-cost carriers have hurt Alitalia's efforts to turn itself around.

Flight attendants announced a 24-hour strike for July 18 affecting Rome, Milan and Venice, a union official said. The action follows an 8-hour strike by air traffic controllers and flight attendants that stranded thousands of travelers last month.