No govt., no deal for Alitalia buyout

ROME, Italy (CNN) -- The board of Alitalia has agreed to a buyout by Air France-KLM, a deal that still needs the approval of the Italian government. The problem is, the government is in limbo.

The board gave unanimous approval to the deal over the weekend. Approval from the government, which holds a majority stake in Alitalia, is just one of the many steps necessary to complete the sale of the national carrier.

The current government is operating in a caretaker fashion following President Giorgio Napolitano's decision last month to dissolve parliament.

New elections are scheduled for April, and opposition leaders have made clear they do not like the current Air France-KLM offer. Trade unions, who must grant their formal approval for the deal to go through, have also said they oppose it.

While the caretaker government and finance ministry have the authority to grant approval and could do so in the coming days, some observers have said that is unlikely to happen given the election campaign and the union opposition.

Unions have said they feel excluded from the consultations. Without their cooperation, it would be difficult for any buyer to return to profitability.

Air France-KLM's offer values the Italian airline at €139 million ($219 million), or 10 cents a share, far below its current share value of around 54 cents a share.

The offer promises the injection of €1 billion ($1.6 billion) but would mean the loss of 1,600 jobs.

Alitalia would retain its corporate identity, including its colors, logo, and flag.

Given the opposition and current caretaker status of the government, a final decision on Alitalia might not come until after the new government is sworn in. That could be approximately a month after the elections, scheduled for April 13-14.

Another big obstacle hanging over the deal is a claim for damages worth 1 billion euros filed earlier this year against Alitalia by the company that manages Milan's Malpensa airport, whose role would diminish under the new plans.

And a final hurdle is the green light from European competition authorities who have warned that Alitalia is not allowed to receive any more state aid.

The government of Prime Minister Romano Prodi fell in January when a small centrist party withdrew from his coalition, leaving Prodi without a majority in the Italian Senate. Napolitano dissolved parliament two weeks later after being unable to negotiate for an interim government. E-mail to a friend

CNN's Alessio Vinci contributed to this report

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