The fate of Alitalia, Italy's floundering national airline, already put on the line by the country's recalcitrant unions, now appears to be caught up in the country's increasingly acrimonious election campaign. With the airline reportedly only weeks away from bankruptcy, and with tough negotiations scheduled for next week between Italy's unions and officials of Air France-KLM which has a buy offer on the table, former prime minister Silvio Berlusconi, who hopes to win next month's vote and return to power, claims he can put together a consortium of Italian financiers, possibly including his own children, willing and capable to improve on the Franco-Dutch offer.

        The problem is that many people simply do not believe him. Where were those financiers before, they ask? And are they really in a position to match the Air France-KLM offer which over the next five years involves an investment of almost three billion euros? To many observers, Berlusconi is simply trying to use the Alitalia issue and that of the Malpensa (Milan) airport as political fodder for his bid to return to power.

        Alitalia, which because of sky-high costs, frequent strikes and poor mangement is reportedly now losing something like a million euros a day, has been in trouble for almost a decade with successive governments - including that headed by Mr. Berlusconi's between 2001 and 2006 - apparantly unwilling or unable to find a solution. The company now has debts of about 1.3 million euros and the outgoing government headed by Romano Prodi has concluded that the only way out is to sell its  remaining 49% of the airline.

       A series of re-organization plans, all of which have involved significant layoffs, have been nixed over the years by the country's powerful unions. And an earlier bid by Air France, one which would have left Alitalia in a far better position than the offer now under consideration was also turned down by the unions and, while Berlusconi was in power,  allowed to lapse. Another more recent offer by the small Italian airline, Air One and a major Italian bank, was vetoed by the current government as less credible than that of Air France-KLM which has been approved by the present government. Air France's CEO, Jean Cril Spinetta, has given the unions a March 31st deadline to decide. "After all, we are not obligated to buy Alitalia", he said last week.

        Another problem is that the Alitalia issue has now been lumped together by many with the future of the struggliing Malpensa airport outside Milan. The Air France restructuring plan - which after 2010 would also phase out Alitalia's cargo division and involves more than 2000 layoffs - would shift the Alitalia hub back to Rome where it used to be which means a drastic cut in air traffic for Malpensa in the immediate future. Malpensa is currently losing money but both the mayor of Milan, Letizia Moratti, and the president of the Lombardia Region, Roberto Formigoni, have joined the SEA airport management company in threatening to sue for damages if the reorganization plan goes ahead. It may not be a coincidence that both Formigoni and Moratti are political allies of Berlusconi.

        Many observers here believe that Berlusconi is using the Alitalia question to assure his victory when Italians go to the polls on April 13 and 14th. Should the Air France-KLM bid miraculously go through, Berlusconi - despite his supposed belief in free-market forces - is almost sure to play the nationalist card and to accuse the outgoing gProdi overnment of selling out the country's flag carrier. If it does not go through, he can claim that his was because of his opposition to the plan and, at least temporarily, pass himself off as Alitalia's saviour. The problem is that Alitalia is losing money hand over fist and could well have to end operations within a matter of weeks. The failure to deal with this problem is a sign of the degree to which Italy's unions have been living in never-never land and to which political establishment is incapable of running a modern nation.