No buyer, no Alitalia?

What happens next for Alitalia?

The Italian carrier has seen its suitors drop out one by one: Aeroflot said no, Lufthansa-backed Italian carrier Air One said no, and MatlinPatterson, a US firm, was the last bidder - and it too said no. That leaves, well, nobody to bid for Alitalia, and it leaves the Italian government in a bit of a bind: it is under some pressure to solve the problem - especially when the 'problem' is losing 2 million euros ($2.8 million) a day. "When something is diseased, you need to amputate it," said Infrastructure Minister Antonio Di Pietro. But on the other hand, the Italian government has come under fire from the unions and opposition groups for the collapse of the seven month-long sale, and the current quagmire is not making it look any better.

Why aren't there any interested bidders? A major reason: the terms and conditions imposed upon the potential buyers by the Italian government. A buyer wouldn't be allowed to cut as many of the 20,000 employees as it wants to, for example. The dual hub system, at Milan and Rome, is inefficient, especially when Alitalia's competitors only have one (e.g. Lufthansa, British Airways, Air France, etc.) And labor unrest is a major discouraging factor - in fact, 100 Alitalia flights were canceled yesterday as some of its staff went on strike. Who knows, though - maybe the government's threat of liquidation might scare the unions into not striking. And there still might be bid in the future - the Italian government has said that it might directly contact some of the former bidders to strike a deal, since it is (understandably) seeking to get out of this mess (and to sell 39.99% of the airline, even though it could sell up to 49.9%). And Alitalia, Air One and MatlinPatterson have said they might be interested in buying - if the government relaxes some of its regulations. The newspaper Il Corriere has said that the Air France-KLM group might be interested, even though a spokesperson for the group said that the Air France-KLM would not be interested in Alitalia unless it is restructured.

In any event, it's up to the Italian government now to make the next move. I'd be interested to hear the opinions of The Airline Blog readers - do you think Alitalia, the historical flag-carrier of Italy, should be saved? Or is enough, enough - should it just liquidate (and maybe start over)?